Announcement
OFFER: WDT: Wellington funding update
09:38am
WDT
25/10/2019 09:38
OFFER
PRICE SENSITIVE
REL: 0938 HRS Wellington Drive Technologies Limited
OFFER: WDT: Wellington funding update
Wellington announces fully supported rights issue to fund continued growth
Wellington Drive Technologies Limited (Wellington), a leading provider of
Internet of Things (IoT) solutions and energy efficient motors to the retail
food and beverage industry, today announced its intention to raise
approximately $5.3m of new capital through a fully supported pro-rata rights
issue. This announcement is on the back of strong year-to-date results that
demonstrates improving profit performance, plus an expanding array of growth
opportunities, including the recently announced new North American IoT
project.
Wellington's Capital Committee Chairperson, Gottfried Pausch commented "With
continually improving operating performance and an exciting funnel of growth
opportunities the board believes now is the right time to increase the
company's growth investment. We appreciate the support of those shareholders
that have committed to support this rights issue and we invite other
shareholders to also participate. This new capital will let Wellington
accelerate its product development and business development capability, so
that it can grow revenue consistent with its 2023 growth target and further
increase earnings and cash generation".
Funding Details
To ensure Wellington can successfully execute new growth projects, continue
to add the necessary skills in sales and IoT engineering and successfully
launch new products planned for 2020, Wellington intends to raise
approximately $5.3m from a pro-rata rights issue.
The key features of the offer include:
- Raise approximately $5.3m through a 1:5 pro-rata rights issue at 10 cents
per new share;
- The offer is expected to close in November with the new shares issued early
in December 2019;
- The issue is 100% committed with either underwrite agreements or firm
pro-rata rights commitments.
Use of funds:
o New IoT business opportunity: Develop a new Connect SCS product and hire
customer support resources for the new IoT business opportunity with one of
the largest manufacturers of commercial coolers in the Americas (the
opportunity previously disclosed in the company's 2019 Interim report). This
new product has an approximate development cost of $1m to $1.5m. Revenue is
estimated to start Q4-2020, with full production revenues estimated at $2 to
$4m annually from 2021. This project is in the latter stages of negotiation.
Wellington's confidence at this stage of negotiations stems from the fact
there is an existing long-standing commercial relationship with this customer
on another line of business. The Wellington board has approved the
commencement of early development work on customer specific applications.
o New Product Launches: Ensure the successful completion and launch of other
new products launching in 2020. New hardware includes the ECR2+, a new
version of the successful ECR2 platform; Connect SCS Black, a Connect IoT
device specifically targeted at large scale new build coolers; Connect
Monitor, a new IoT device to allow retrofit in a broader range of coolers;
Connect Network, a new 'always on' IoT device; and new apps including one
that helps store owners manage the in-store cooler or display shelves.
o Develop the food service market: Fund entry into the food service market
with new IoT hardware and data solutions. Market entry has already commenced
in New Zealand with SKOPE Industries. Deploy sales and technical resources
that are closer to the main USA market for food service.
o iProximity platform development: Market development in support of expanding
the company's iProximity platform sales which includes technical marketing
resources to explore new areas such as smart venues and non-refrigeration
based digital marketing. The expansion of iProximity sourcing relationships
to support the growth of proximity marketing devices used for
non-refrigeration customers.
o Expanding sales and technical capability: Expanding the USA and Western
European sales teams to win new customers for Wellington's IoT solutions,
ECR2 and ECR2+ motors. Continue the expansion of the company's software and
hardware teams to improve capability and accelerate time to market for new
products.
o Repay high cost debt: Wellington has a $1m loan from Onimeg Investments
Limited and a US$0.6m loan from Meta Capital Limited which are both repayable
on 31 March 2020. Proceeds from this issue will be used to repay these loans
on or before the due dates resulting in annualised savings of $250k in
interest costs. Total annualised savings including the partial repayment of
the Onimeg loan in September 2019, is approximately $500k.
This rights issue has been approved by the independent Directors of
Wellington.
Governance note
Acting Chairman John McMahon is the sole director and shareholder of Meta
Capital Limited. Meta Capital has loaned US$0.6 million to Wellington on
arms-length terms and this loan is due for repayment on 31 March 2020. Part
of the proceeds of the capital raising will contribute towards repayment of
this loan. In addition, Mr McMahon is a director of NZX Limited, the parent
company of Smartshares Limited, which is a substantial product holder of
Wellington with 27.478% of the issued ordinary shares of Wellington as at 6
June 2018 (being the date of its most recent substantial product holder
disclosure). Given these factors, Mr McMahon is deemed to be "interested" in
the Offer. Accordingly, he has not participated in discussions or
information where a conflict of interest may arise and has been recused from
all Wellington Board decisions relating to the Offer. Mr McMahon is not an
independent director of Wellington.
Contact:
Greg Allen Howard Milliner
Chief Executive Officer
Phone +1-778-238-6494
Howard Milliner
Chief Financial Officer
Phone +64 27 587-0455
End CA:00343252 For:WDT Type:OFFER Time:2019-10-25 09:38:39
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