Shareholders Association to oppose Wynyard 'black hole'

Thursday 11th February 2016

The New Zealand Shareholders Association says it will oppose security software developer Wynyard's plans to sell new shares below a previously announced price floor of $2 a share when a meeting of investors is held next week.

NZSA chairman John Hawkins said there was no clear information about how the company would protect existing investors and that his members faced an information "black hole", although chief executive Craig Richardson says the company is "carefully considering a number of options including those that John (Hawkins) has provided."

Wynyard shareholders agreed to let the board sell 15 million shares at a price of at least $2 at a special meeting in December after the company drummed up investor interest during a roadshow. However, since then global equity markets have been volatile. The meeting on Feb. 18 will see the board ask shareholders to approve the share placement it conducted in June 2015, when it raised $45 million. That would allow it to issue more shares without the $2 minimum price restriction.

Earlier this month, chairman Murray Horn wrote to investors to explain the move. "Global volatility crystallised earlier than directors expected and these unforeseen market conditions are disrupting the company's ability to raise capital at this price at this time from the investors that expressed interest in late 2015. Wynyard is a growth company that requires further capital in the short and medium term and continues to rely on support from shareholders and investors."

But the NZSA said far more explanation was needed. In particular they're concerned that Wynyard has given no indication of the circumstances or price at which it will issue new shares. It says the board would be able to offer large parcels at potentially large discounts, heavily diluting existing investors. The NZSA said it had engaged with the company and made a number of suggestions and if a reasonable solution is offered, then the association would support the resolution at the upcoming meeting.

Wynyard's shares last traded above $2 a share in February last year before falling by almost a third on prices seen 12 months ago. The shares rallied today, rising 7.3 percent to $1.48.

In a brief statement sent to BusinessDesk, Richardson said: "Both NZSA and Wynyard agree that global capital markets have changed significantly since December. We also both agree it’s important to get the right outcome for the company and its shareholders. We are carefully considering a number of options including those that John has provided."

"It’s also important in this environment we consider how we deploy capital to continue to grow the company, accelerate our shift to profitability and minimise any future capital needs. As soon as we reach a decision we’ll inform the market.”

A spokeswoman said there were no plans for anything other than the shareholder vote at next week's meeting.

BusinessDesk.co.nz

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