Friday 30 December 2016 10:56 AM
Lateral Corp goes private, sells NZAX listing to property newcomer, Golden Tower
By Sophie Boot
Dec. 30 (BusinessDesk) - NZAX-listed mobile payments company Lateral Corp is the vehicle for a backdoor listing in a $3.2 million deal with property developer Golden Tower NZ.
In a transaction valued at $3.2 million, Auckland-based Golden Tower will pay $1.6 million in cash and add as an asset a commercial property valued at $1.6 million for new shares giving it a 90 percent shareholding in Lateral. The deal is dependent on shareholder approval, Lateral said in a statement.
Golden Tower, which was incorporated in May 2016 according to Companies Office filings, intends to develop residential property around New Zealand and to sell building materials for wholesale and retail.
Golden Tower's sole shareholder is Kawo Chan, and its sole director Hongwen Song, who was also a shareholder until Nov. 22.
Lateral's existing business will be spun into a new company called Lateral Profiles. Shareholders will get shares in Lateral Profiles in proportion to their current shareholding in Lateral, effectively privatising the business, while retaining a minority stake in Golden Tower.
The board said Lateral would be better served as a private company in the short to medium term, with fewer compliance costs, and the sale would put it in a good position to achieve its long-term goals. The company raised about $415,000 in November through a share purchase plan at 5 cents per share.
"Lateral has seen strong growth in customer acquisitions over the last five months as a result of the marketing initiatives it implemented using the capital it raised from investors in August and the recent share purchase plan," it said. "The cash that the Lateral business will receive as a result of the transaction is expected to provide enough capital for Lateral to continue its business growth through Lateral Profiles."
Earlier this month, Lateral said first half revenue had dropped 60 percent to $72,000 due to a reduction in sales activity during the latter period of the previous year, which resulted in the customer base declining, while at the same time capital constraints limited its ability to market its products and increase customer numbers.
Its first-half loss of $174,000 in the six months to Sept. 30, compared to its $545,000 loss a year earlier, recognised an accounting gain of $451,000 from the write-off on loans received from related parties as part of the recapitalisation agreed at the company's annual meeting in September.
The shares last traded at 5 cents on the NZAX platform, and have dropped 70 percent this year. Lateral Corp joined the market at 20 cents in a compliance listing in August 2014 , valuing the company at $4.15 million.