ITC trying to raise capital in 'difficult' market

Venture capital company IT Capital Ltd, which was last month reprimanded for allowing misleading information about the company to circulate, said today it is raising more capital in a "difficult" market.

The company said a capital raising exercise was "under way" which is expected to inject between $3 million and $5 million.

The company is issuing shares at 4 cents compared with yesterday's closing price of 7 cents. The share price was down 1-1/2 cents at 5.5 cents today.

If $4 million was raised, it would be a 58 per cent increase in the number of shares on issue.

The company said it would put the capital raising proposal to shareholders at this year's shareholder meeting, planned for next month.

"With current cash reserves at less than $500,000, new capital is required to allow the company to move forward over the next 12 months," chief executive David McKee Wright said.

He said market conditions had made the capital raising exercise a difficult one and that the placement price of 4 cents "reflects the risk that is attached to investment in IT Capital in its current state".

He said the climate for venture capital companies was very difficult.

The company also intended to conduct a rights issue within the next six to nine months, as part of on-going capital raising.

ITC would also announce a new strategy for the next year at the annual meeting.

Mr McKee Wright denied the company had cashflow problems.

"The company has half a million dollars left, and that's it. It doesn't have cash flow problems right now, but it needs to have a successful placement to ensure its continuity."

He said there was a group of people prepared to put cash into the company but he would not disclose who they were.

The company got into hot water last month for allowing a misleading article to ramp up its share price and for failing to clarify the situation until several days later.

The company was cleared of possible insider trading by the Stock Exchange market surveillance panel but reprimanded for poor communication to the market.

ITC's share price doubled after a Sunday Star Times article suggested ITC's 43 per cent-owned, high profile 3D company, Deep Video Imaging (DVI), was on the brink of a major deal with the United States military.

ITC was asked on the Monday by the panel why its share price surged. It said the rise could have been due to the article -- tacit endorsement of the information in the article -- but waited until the Thursday before it "clarified" some misleading overly optimistic information in the article.

ITC denied DVI was on the brink of a deal with the US military, saying any such deal was at least one, and possibly three, years away.

There was unusually heavy trading in the stock on the Monday and Tuesday after the article was published.

Just over two years ago, at the height of the tech boom, ITC's price was near one dollar.

- NZPA