Wellington Drive shares soar 23% on North American tie-up with East West Manufacturing
March 31 (BusinessDesk) - Shares in Wellington Drive Technologies soared 23 percent after the unprofitable energy efficient motor maker signed a channel partnership with US-based East West Manufacturing.
The stock climbed 3 cents to 16 cents, having shed 46 percent this year.
The Auckland-based company announced the deal with Atlanta, Georgia-based East West as an exclusive channel partner for its electronic motors in the US and Canada, it said in a statement. The alliance aims to improve customer service and reduce lead-times, Wellington Drive said.
“East West knows the North American motor manufacturing market very well, so expanding our sales and support network in North Americas through this channel partnership with East West makes perfect sense,” chief executive Greg Allen said. “We see customers in the Americas increasing their sustainability initiatives and this extension of our existing East West relationship will only serve to help customers deliver on their sustainability goals.”
The deal comes after Wellington Drive abandoned its target of breaking even in the 2014 financial year, instead seeking to lift annual revenue to between $30 million and $35 million from $27.4 million.
The company, whose annual accounts were tagged by auditor PwC over forecast cash flows, is looking to raise $5 million by selling mandatory convertible notes to existing shareholders in a pro-rata one-for-five rights issue. The offer is underwritten by SuperLife, which holds about 19.7 percent of Wellington Drive, and other institutional shareholders have committed to take up their entitlements.
Wellington Drive will seek shareholder approval at the May annual meeting to let SuperLife take up the offer, which could lift its stake in the company above the 20 percent takeover threshold.