Heavyweights buy into Provenco

Stephen Tindall

Navman founder Peter Maire and The Warehouse's Stephen Tindall have bought into payment technology company Provenco as the firm clears debt and gets set for growth.

Provenco will issue five million shares each to Maire and Tindall and their associated interests at 85c a share - a discount to last week's closing price of 91c - for a total of $4.25 million each.

ABN Amro Craigs research analyst Mark Lister said Tindall and Maire were two great names for Provenco to get on board.

"From past experience, they know what they're talking about, so if they're into it then there probably is a good story there," Lister said.

The company will also offer new shares up to a value of $5000 to each existing shareholder, also at 85c a share, capped at a total value of $7 million.

If the total $15.5 million is raised, which is equivalent to about 16 per cent of Provenco's market capitalisation, Tindall and Maire would each own about 4 per cent of the company.

Chairman David Wolfenden said Provenco had not placed any shares for a cash injection in four years, during which time turnover had grown from $62 million to about $145 million.

The new capital would be used to develop Provenco's international petrol station retail technology business, repay some bank debt and strengthen the balance sheet in anticipation of future growth.

"The significant growth of recent years and improved profitability has been funded by internally generated cashflow and some bank debt and it is now time to lift the level of equity in the business to take Provenco forward," Wolfenden said.

Provenco's shares rose 3c yesterday to close at 95c, continuing an upward trend since a profit downgrade triggered a dramatic sell-off last month and a share price slide from 90c to 74c.

The company said at the time that the downgrade was related to timing issues rather than any lost revenue.

Provenco recently signed a three-year deal worth more than $17 million with a subsidiary of Malaysian oil giant Petronas to supply outdoor payment technology to petrol stations.

The Malaysian deal followed Provenco's first European deal - a $3.5 million contract to design, develop and deliver electronic and outdoor payment systems to oil company Shell's 200 Belgian petrol stations.

Wolfenden said such contracts had long lead times and required a great deal of research and development.

The addition of Tindall and Maire was an endorsement of Provenco's growth strategy "in particular for our success in breaking into the international retail oil industry markets in Malaysia, India, the Middle East and, most recently, into Europe".

He said neither investor would be an active working shareholder.

In addition to the $8.5 million, the Maire and Tindall interests would get 3.45 million options each, which could be converted into shares for $1.05 each.