Wgtn Drive and East West Manufacturing: Growth Partners
Wellington Drive and East West Manufacturing enter Growth Partnership
Auckland, New Zealand - Wellington Drive Technologies, a leading global provider of Energy Saving Electronic Motors, Airflow and Refrigeration Control Solutions to the commercial refrigeration market; and East West Manufacturing, a leading US based supplier of contract manufacturing services, supply chain services and industrial products, have announced a strategic partnership to leverage their joint capabilities and accelerate growth.
The partnership between Wellington Drive and East West will strengthen the product and service offerings of both companies through collaborative product developments, supply chain cost reductions, and marketing alliances focused on broadening global reach and customer offerings.
As part of the new strategic relationship, Wellington Drive has recently entered into a contract manufacturing agreement with East West, where they will become a second supplier of Wellington's products from their Vietnam factory. This agreement supports Wellington’s move from a single source supply chain to a dual source model, allowing Wellington to raise capacity, reduce costs, improve capability and reduce concentration risk.
“The relationship with East West provides access to a high capability, low cost supply chain, and will also deliver opportunities to accelerate Wellington's revenue growth through joint development of new products, improved competitive solutions for customers and through leveraging East West's USA and Asia based engineering, manufacturing and distribution capabilities, giving Wellington the ability to be closer to our end customers” Greg Allen, Wellington CEO said today.
Both parties agreed that an important element of a successful partnership would be an investment in Wellington by East West to give East West an incentive to support Wellington’s growth plans.
Scott Ellyson, CEO of East West Manufacturing commented “East West is excited by the partnership with Wellington and the access it gives us to advanced motor and electronic solutions, deep product engineering and commercialization capabilities, and the possibility to collaborate on go-to-market programs for both contract manufacturing and new products. It was important to us to show long term commitment to the relationship through a strategic investment, and we believe the growth opportunities for both companies are substantial.”
As a result of this long-term commitment, East West will invest $1.64 million in Wellington in return for 10.6 million new Wellington ordinary shares (at 15.5 cents per share) and 5.3 million warrants to acquire additional new Wellington shares at 20 cents per share within the next two years. The initial investment will give East West an 8.4% stake in Wellington, with settlement this week. In the event the WDT share price increases to over 20 cents within two years, East West would be expected to exercise the warrants and invest a further $1.06 million in WDT at 20 cents per share giving it a 12.1% shareholding, based on the company’s issued capital immediately following the initial investment.
The Wellington Board believes that the price of the new shares, being a 19% premium to the 13 cent price of the recent capital raisings, represents a good outcome for existing shareholders while the total partnership with East West provides Wellington with additional capabilities and additional capital to support the important transition to an improved supply chain model and consequent customer growth. The “out of the money” warrants provide an incentive for East West to work closely with the Wellington management team to help deliver on the value potential of Wellington over time.
“We believe that the partnership with East West will create significant value for Wellington shareholders and supports the company’s short term financial improvement objectives as well as its long term growth plans. As mentioned in the company’s 2013 half year announcement, the outlook for Wellington remains promising and the Strategic Partnership with East West further demonstrates the Board’s and Management’s commitment to deliver on its promises” Tony Nowell, Wellington Chairman said today.
About Wellington Drive Technologies Wellington Drive Technologies is a leading global provider of energy efficient electronic motors, airflows solutions and refrigeration control solutions for the commercial refrigeration markets. It serves some of the worlds leading food and beverage brands and refrigerator manufacturers with advanced products and solutions that reduce their costs, improve product sales and reduce energy consumption. Wellington is headquartered in Auckland, New Zealand, and is listed on the New Zealand stock exchange under the ticker symbol NZ:WDT