Wynyard shareholders approve $30 million private placement
Wynyard Group [NZX: WYN] shareholders have passed a resolution to raise at least $30 million from a number of strategic investors to enable the security software firm to cash in on increased demand for ways to combat cyber, terrorist, and organised and transnational crime.
The vote at a special general meeting in Auckland approved the company issuing up to $15 million ordinary shares over the next 12 months at a minimum issue price of at least $2 per share. The shares rose 1.6% to $1.97.
New Zealand Shareholders Association chairman John Hawkins spoke against the resolution in principle because it was Wynyard's third private placement in the past year, which dilutes existing shareholders.
Mr Hawkins said while he understood that a private placement allows the company to raise more capital at a lower cost, the association prefers rights issues which are fair to all shareholders.
The notice of the resolution sent to shareholders said issuing a further 15 million shares would dilute existing shareholders by about 10%.
The move followed positive feedback from institutional investors and high net worth individuals in Australia, Asia, and the US after chief executive Craig Richardson conducted an investor roadshow at the end of October in response to a number of inquiries about the company's growth prospects.
Chairman Murray Horn said because the shares are so thinly traded, it's difficult for these investors to gain a large shareholding in the company without a private placement.
The board told shareholders it believed the current share price was driven by the thinly traded market and didn't reflect the company's value considering its market opportunity and relative to its peers in other tech-savvy markets. The $2 per share minimum price of the new shares represents a 40% premium to the volume weighted average trading price of the shares in the 10-day period before the notice was sent to shareholders.
Mr Richardson said there had been an "acceleration of interest" from corporates and governments who now have bigger budgets to spend following the Paris terrorism attack, a growing problem with refugees in the Balkan corridor, and several high profile cyber crime attacks on corporates.
UK broadband operator TalkTalk faces a bill of up to £35 million to deal with the cyber attack that saw almost 157,000 customers have their personal details hacked in October while a recent survey found demand for cyber security experts had quadrupled to record highs in the past year in the wake of the huge data leaks at TalkTalk and extramarital dating site Ashley Madison.
Horn said that given market unpredictability, he wanted to raise the capital "as soon as possible" and told shareholders "there is a lot of active interest, we're not just blowing smoke here."
He anticipated the company will seek a handful of strategic investors and it was looking for three things – people who understand the markets it is in, can help network in those markets, and want to be long-term holders of the stock because they understand the potential upside.
"Some we've talked to in the market meet all three, some only two of those," he said.
The money raised will be used to expand its operations in the US and the Middle East, grow its sales and global partner network, invest in product research and development, and service working capital needs.
Wynyard's revenue guidance for the 2015 financial year remained unchanged in the range of $40-45 million.
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