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Wellington Drive shares down 60%

Tuesday 30th November 2010 3 Comments

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Shares in Wellington Drive Technologies, the manufacturer of highly efficient brushless electric motors for the commercial refrigeration and ventilation markets, fell 60% to 3 cents after it said it was looking to raise $8.4 million to fund operations.

The North Shore-based company, which is backed by Warehouse founder Stephen Tindall, is looking to undertake a one-for-one pro rate renounceable rights offer at the issue price of 1.25 cents per share, it said in a statement. That's an 86% discount on the share price of 7.5 cents immediately before the announcement.

The proceeds will be used to fund working capital as sales expand, operating losses capital expenditure requirements. That follows a share purchase plan in September, which raised some $7.6 million at about 7 cents a share, also to fund working capital.

The company, which has been pushing to achieve profitability, posted a net loss of $5.9 million for the six months to June 30, compared to a net loss of $9.9 million in the same period previously. Revenue for the period rose to $12.6 million from $10.8 million, while cash reserves rose to $5.9 million from $5.2 million previously.

At the time chief executive Ross Green said the company continued to see robust demand for its products, with "orders are now well above sales for the first time in the company’s history". He gave no indication of when it was likely to break even.

The offer, which is expected to be launched early next year, will be made to eligible shareholders with a facility for the sales of rights to those on the record outside New Zealand and Australia.

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Comments from our readers

On 1 December 2010 at 8:32 am Uncle Walker said:
While this company has shown promise for some time, its management leaves a great deal to be desired. Time to get some business heads in charge, instead of engineers, technicians etc
On 1 December 2010 at 9:44 am John V said:
You have to wonder who advised the company on setting such a low price for the new issue. It s only a couple of months since setting a price of 7cents. Hopefully a correction will be issued.
On 1 December 2010 at 11:53 am Ekman said:
There is demand for their products, their business plan obviously does not work with the present board/management, new blood is needed.
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