Wynyard to raise $30M in deeply discounted rights offer; shares tumble 37%
By Jonathan Underhill
Feb. 24 (BusinessDesk) - Wynyard Group, the crime-fighting and security software developer, plans to raise about $30 million in a one-for-four renounceable rights offer at 85 cents a share, a 55 percent discount to its last trading price and well below the minimum $2 that shareholders approved in December. The shares tumbled 37 percent when they resumed trading.
The company needs extra funds to meet its working capital requirements by the end of March, having raised $42.6 million in 2015, when its net cash outflow was $32.7 million.
Wynyard had its shares halted last week, while cancelling a planned share placement it said was no longer viable, which had prompted the company to consider other capital raising options. Cancelling the placement meant Wynyard called off a special meeting it had sought to obtain shareholder approval to be able to issue shares below the $2 floor. The NZ Shareholders' Association was among opponents of the plan.
Wynyard was caught in a bind if it was forced to stick to a $2 minimum, given the stock price subsequently declined, to reach an intraday low of $1.30. The stock fell 57 cents to 97 cents on the NZX today.
The company said today it had received "broad based indications of support from new and existing institutional investors and expects to finalise commitments for the full amount of the rights offer."
“Our strategy of targeting larger contracts is proving successful and we now have a qualified FY16 pipeline which exceeds $90 million and our average deal size has increased significantly," said chief executive Craig Richardson. "This gives us confidence in our strategy going forward and our pathway to profitability.”
Wynyard has arranged an interim $10 million credit facility with major shareholder Skipton Building Society to provide the company with capital it may need while waiting for the proceeds of the capital raise. The loan is secured over the assets of the company, and the board must be confident the company can raise sufficient capital before drawing down on the facility.