Wellington Drive to raise $11.4m

Friday 9th January 2009

Wellington Drive Technologies, which makes energy-efficient motors and fans for refrigeration and air conditioning, plans to raise $11.4 million selling shares at a discount to existing investors. Its stock tumbled.

The funds will provide working capital to help expansion as the Auckland-based company heads into a second year of losses, according to a statement. Sales are forecast to jump by more than 150% to $40 million this year, while the net loss narrows to $9.7 million from $11 million in 2008.

Wellington Drive today registered a prospectus for the 1-for-3 rights issue at 10 cents apiece, it said. The shares tumbled 28% to 13 cents and have fallen 60% in the past 12 months. The company said it may break-even during the second half of 2009.

To reduce costs, the rights issue won't be underwritten, it said. The offer is open to shareholders registered as at January 23 and will close on February 27.

Revenue growth would be driven by sales of its ECR range of motors used in the commercial refrigeration systems. Vendo de Mexico is expected to buy 400,000 of the motors in 2009, making it the biggest customer, while Hill Phoenix and JE Stork Air will also buy more, it said.

"Higher volumes that Wellington is targeting in 2009 are expected to result in lower costs per unit from Wellington's manufacturing suppliers," the company said.

"Cost reduction activities are substantial and are expected to result in improved gross margins for ECR motors and for Wellington's overall business, from the second half of 2009."

The company reported patchy results from its 'Total Integration' service, where it designs and develops motors that are integrated into the appliances they drive. Two projects are "progressing close to expectations" with production from one expected to start in the final quarter of 2009.

Two other projects have stalled and may not be commercialised, it said.

By Jonathan Underhill

Comments from our readers

No comments yet