Powerhouse Ventures won't proceed with sale of Invert Robotics stake

Chief executive Paul Viney says Invert's initial capital raise is proceeding "terribly well"
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Christchurch-based technology incubator Powerhouse Ventures will not proceed with plans to sell a quarter of its Invert Robotics' holding for $1.3 million as one of the sale conditions has not been satisfied.

In September, Powerhouse said it had been approached during Invert's current financing round and announced plans to sell, stating the sale would result in a profit above its current book value of Invert. It owns 34.6% of the company and the sale would have reduced that to between 23.6% and 28.2% of the shares.

The deal was conditional on completing a pre-emptive shareholder process and co-sale rights under the shareholder agreement it has with Invert. "Whilst Powerhouse agreed to the now-cancelled transaction, we are more than happy to maintain our higher holding stake in Invert," Powerhouse said.

According to Powerhouse, the potential buyer will now invest directly in Invert's current capital raise to ensure it achieves its required holding level of Invert shares. Invert is undertaking an initial capital raise of A$4 million, which is proceeding "terribly well," said Powerhouse chief executive Paul Viney. The book is expected to be closed in a week or two. He declined to name the potential buyer.

Invert will subsequently look to raise around a further $A6 million to "enable M&A expansion throughout Europe," he said. The second part will take place over the next 12 months, according to Mr Viney.

Invert Robotics has developed a novel climbing robot system for remote inspection services in the dairy and food processing sectors as well as the aviation industry. According to Powerhouse, it has an enterprise value of $10.7 million and seven employees.

Powerhouse shares recently traded at 35Ac on the ASX and have more than halved this year.

(BusinessDesk)


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What this means is the capital raise is not going well and they need the money from the investor to get the funds direclty into Invert. If it is going well why not just raise the $10m in one go.

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Furthermore raises some questions if the additional sale of $1.4m of Arc Active shares was done just to cover this shortfall in funds - not good for a fund being forced to sell assets to fund expenses.

time is fast ticking on this dog. They raised $10m a year ago and that has gone and all they have to show for it is one or two new investments and the fire sale of some of their other investments.

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And what do you know about the capital raise of Invert? How on earth do you know? Are you the CEO or somehow involved in the business?

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No i am not involved, but I have seen PR spin from the likes of PVL. I ask the following questions.

(1) If the raise was going so well why would they go from raising $10m to a $4m and then $6m split. As Xero has shown it is better to raise all the money on offer when it is one offer rather than play silly buggers.

(2) If the deal was so good why is the "investor" suddenly changing their mind to allow PVL to keep their shares, why not do the original deal. Getting PVL diluted would be a great idea, PVL has shown itself to be a poor co-investor. Even their PR says they want control.

(3) Why did PVL say it was a good deal etc and now walk away from it when they are still short of cash. The Arc Active deal gives them $1.8m but that buys them maybe 3 or 4 months before something has to happen. They would be much better off with cash to give them more time.

Sorry maybe the Invert Robotics deal is going really well, but what is being said raises a lot of questions in my mind.

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It would strike me this is more likely related to the fact that PVL has had a significant cash injection via their sale of Arc Active, thereby not requiring the sale of Invert shares, a high value asset on their books.

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As per above the deal was between two parties, it is not just up to PVL to pull the plug. Also the Arc Active deal only buys them 3-4 months. Better to take the cash now than hope something else comes along to save them......high risk strategy if they are looking at an asset sale every 3 months.

Plus having announced the deal they should have delivered on it.

I hope I am wrong but I would not trust anything from PVL they have been very good at spinning a story......Hydroworks was looking positive until they were placed into liquidation.

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Something doesn't sound right here (which isn't unusual for PVL).

They had agreed the deal with their portion of the sale dependent on the amount of pre-emptive and co sale rights taken up. Unless someone had the ability to block PVL selling, or sell in priority to PVL, then all the rights should have done is mean PVL's portion of the sale was less than 100%, which was made clear in the original announcement.

A big blow for PVL as they need the cash.

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Wanting to be a little or lot rude......what would Paul Viney know about anything that was going on. He was a director of Hydroworks, which racked up $12.6m in liabilities, with no assets, and he / PVL claimed it came as a surprise to them that Hydroworks was in trouble.

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31st Oct: Invert robotics is well progressed with its $10m capital raise.
14th Nov: $4m capital raise is going “terribly well”

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Exactly they have gone from talking about raising $10m and having excess to buy out PVL holding to now focusing on $4m and no buyout. Having to raise $6m in a years time. That is a big risk......who is to say investors will be around.

A bit like the announcement during the crowd funding of a European distribution deal .......but no sign of that anywhere

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This announcement is about pvl not invert. Pvl for whatever reason have not completed the deal, as far as I can tell it has nothing to do with invert. I also understand invert is a minimum $4m, so just poorly chosen words from pvl. I also never heard of invert buying out pvl, how could they ... you've made that up!
Probably should focus on the reason why the sale wasn't completed.

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But what is the real reason. I think all other existing shareholders would have welcomed PVL reducing their influence on Invert and wouldn't have block the sale (if anything all they should have been able to do is take part on a pro-rata basis).

I do wonder if it was Invert that refused to approve the sale on the basis they would prefer the cash themselves, rather than let an existing shareholder cash out.

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The potential buyer holds all the cards here.
Powerhouse have no cash to participate in the capital raise and they need Invert to survive.
The buyer could easily demand a lower valuation now. This is a much cheaper way of pushing out PVL than buying their shares.
Invert need the cash, there are few other buyers and Powerhouse have no power.

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Russell Yardley and Paul Viney produce so much spin it makes me dizzy.

The Buyer balked. Powerhouse did not choose not to proceed as their press release headline implies. Yardley and Viney have no credibility left.

Be transparent, who was the buyer and why did they walk away?

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Powerhouse are doing appallingly well keeping their head above water.

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F17 results stated the outlook was for partial sale of Invert yielding $0.8m cash. This must mean NZVIF took up their rights. Wouldn’t have been a great use of cash buying out NZVIF.

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Great example of what happens when your "terribly well" reputation precedes you!

Just wrap it up, return funds to shareholders.

[Edited]

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Based on other conversations would not surprise if PVL reneged on the deal or tried to extract something else.

Good news is whatever cash avaliable is going into the company and that is the best outcome.

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My guess is that the number one condition to buying out Powerhouse shares would have been that the Invert capital raise successfully raised a minimum amount of cash at a minimum valuation by a certain date. The conditional share sale announcement had a set valuation.
Without a better explanation, my assumption is that this was the condition that wasn’t satisfied.

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Why “guess” or “assume” what is going on at Powerhouse?

As a public company, shouldn’t Viney and Yardley provide full facts and transparency to its shareholders and the investing public? Maybe the regulators as well?

Nothing here is confidential...

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For some reason ASX and ASIC don't seem to care about what is said reminds me of the NZX in the 80s.

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You think that’s bad. A croplogic shareholder tweeted their full year forecast despite the company not releasing any forecasts to the market.

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It was also the broker and underwriter. Inside information anyone? Some of course think it is just an attempt to pump the stock price.

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NBR should ask the underwriter why he is sharing full year forecasts with his followers and buying stock when croplogic has not provided this forecast to the market.
https://twitter.com/SteveSilver18/status/925151428657610753
NBR has already published an article on him being suspended by FINRA in the US.

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He tweeted he was buying more at 13 cents a while back. Has lost 20% in value since then. Now under 10 cents.

Wonder if PVL will update the market on that fact. They seem to want to tell the market the "good" news but not the bad.
[Edited]

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