Ross Green of Wellington Drive Technologies. File photo / Paul Estcourt
Rights trading begins on the stock exchange today for Wellington Drive Technologies' latest round of capital raising, announced in November.
The Albany manufacturer of energy-efficient motors is offering its investors one new share for every existing share at a rate of 1.25c each - a 52 per cent discount on
the stock's closing price of 2.6c last night.
The company aims to raise $8.4 million through the offering.
In a statement included with the prospectus, Wellington's chairman, Tony Nowell, said addition capital was needed as a reduction in inventory levels targeted in the firm's interim report had not been achieved.
He said two main factors lay behind this - delays in the implementation of new supply chain procedures and an unexpected reduction in a major customer's fourth-quarter deliveries.
"Continuing growth requires more capital," said Nowell, who was appointed chairman last month, replacing Rick Boven.
"While it is regrettable that we need to come to shareholders at this point in time, we have decided to undertake a rights offering as being in the best interests of the company's expansion and long-term success."
About $40 million was wiped off the value of Wellington in the two weeks after the announcement of the capital raising at the end of November, when its share price plunged 80 per cent. Its market capitalisation has since improved.
Last month chief executive Ross Green said it was important to look beyond the market's reaction to the rights issue and understand the "fundamentals" of the firm.
Sales, as well as demand and margins were tracking well, he said.
"But I can understand why there's a portion of the shareholder body that's ... getting impatient with us. It's our job to deliver on what the shareholder body expects and which is a decent commercial success."
The rights will stop trading on January 27.
