Tuesday 7th May 2013
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SLI Systems, a Christchurch-based developer of website search software, plans to sell its shares at $1.50 in a listing on the NZX at the end of the month to fund its long-term growth aspirations in Japan and Brazil.
The company plans to raise $15 million in an initial public offer and a further $12 million from existing shareholders as it prepares to list on May 31, and has lodged its prospectus with the Companies Office. Those funds will be used to pay for new sales and marketing staff in existing markets and its expansion plans into Japan where it sees opportunities. About $7.3 million of the cash raised will be held for working capital, and about $2.1 million is expected to cover the net cost of the listing.
Like listed tech-darling Xero, SLI Systems plans to forgo profits in the short to medium term in an international sales drive towards long-term growth. The company forecasts a loss before interest, tax, depreciation and amortisation of $1.9 million in the 2013 financial year on sales of $18.3 million, widening to an EBITDA loss of $6.9 million the following year on revenue of $22.2 million.
"While we fund this accelerated growth phase we anticipate that the business will make losses in the near-term as we build the platform for future growth," chairman Greg Cross said in his letter to investors. "The board believes further investment into initiatives to generate value enhancing recurring revenue is currently the best path to future growth in value."
SLI Systems has been set up to acquire SLI Systems Inc, the US business originally set up in Christchurch in 2001 and later bought back from its US owner.
The company cited a change in the algorithms used by major search engines such as Google as a potential risk, with referrals from Site Champion generating 20 percent of SLI's revenue.
Other risks include intellectual property infringement and protection, and its threat to open source code which SLI uses in some of its products.
The offer opens on May 14, closing on May 28 with a listing scheduled for May 31.
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