Hardy bunch' prop up Wellington Drive

Wellington's share price closed up 0.3c at 2.1c yesterday. Photo / Filephoto

Shareholders in Wellington Drive Technologies, a North Shore-based manufacturer of energy efficient motors, have granted the loss-making company some breathing room.

The capital raising it carried out last month was fully subscribed, netting about $8.4 million, the NZX-listed company announced yesterday.

Wellington - which supplies its motors into the commercial refrigeration and ventilation industries - said last year that it required the additional cash to order materials in preparation for a projected increase in production and sales in 2011.

The working capital shortfall that led to the capital raising was partly the result of a major customer deferring the bulk of its scheduled deliveries at the end of last year.

Speaking from a refrigeration trade show in Las Vegas yesterday, Wellington chief executive Ross Green said investors' response to the offer showed they had looked beyond the news headlines and understood the fundamentals of the firm's business, which included strong sales.

He said Wellington, which has undertaken numerous capital raisings since its listing in 2001, understood that investors did not like being continually asked to sink more cash into the firm.

Last month's capital raising followed one in September last year that netted $7.7 million from its investors - $2 million of that coming from its regular shareholders through a share-purchase plan.

Market commentator Arthur Lim said the fact that Wellington investors had committed another large sum of money to the firm showed they were a "hardy bunch". Many shareholders probably took up the offer to avoid having their investment diluted, Lim said.

But he said last month's capital raising would be the "last throw of the dice" for the North Shore firm.

"This is very much the last opportunity for [Wellington] to show that they able to deliver on what they've told shareholders and the market."

Green said the pick-up in sales the firm projected late last year was now taking place. A global shortage of componentry, which proved challenging for the firm last year, was also easing.

"We still have to keep fighting for components, although there's been a general improvement in component supplies."

Wellington has been pushing to turn a profit for over a decade.

The firm reported a net loss of $5.9 million for the six months to June 30, 2010, compared with a net loss of $9.9 million in the prior comparable period.

Wellington sold more than 600,000 of its energy-efficient motors in the year to December 31, 2009. Despite those sales, the company reported a bottom-line loss of $14.7 million during the same period.

Wellington's share price closed up 0.3c at 2.1c yesterday.