Tomizone CEO Geoff Wanless follows chairman out the door

Auckland-based Tomizone is listed on the ASX. Photo / 123rf

Auckland-based Tomizone chief executive Geoff Wanless is following his chairman out the door as the ASX-listed wi-fi service provider raises new funds and its lender takes a more hands-on role.

"Tomizone's chief executive officer Geoff Wanless has advised that due to the changing nature and restructuring of the business over the past year, he has taken the decision to step down from his role at Tomizone to pursue larger opportunities in global markets," it said in a statement. The company said it will now begin a search to identify a "suitably experienced" chief executive to drive future growth.

Tomizone joined ASX through a reverse listing on June 1, 2015 but faced significant challenges due to delays with product feature launches and organisational readiness, and has reported consecutive losses. Tomizone had interest bearing debt of about A$4 million (NZ$4.22m) as at December 31 and its directors recognised the need for more capital to be raised when signing off on its ability to continue as a going concern in the company's first-half report.

Earlier this month, the company said it wants to raise about A$2m to repay debt and announced the appointment of Ian Bailey as chairman, replacing Tarun Kanji whose resignation was effective immediately and followed the exit of director Januario Atencio. At the time it said there could be further changes to the board is the company enters "its next phase of development."

Today, Tomizone said its immediate priority is to complete the entitlement offer to strengthen its balance sheet and allow it to pursue growth opportunities. Earlier this month, it said it had successfully completed a private placement of new shares, raising A$200,000 at 1.5 cents a share, and was undertaking a pro-rata entitlement offer to raise up to a further A$1.84 million at the same price. That's a 23 per cent discount to the theoretical ex-rights price, and the funds raised will be used to redeem subscription bonds and cover working capital needs.

The company's 1-for-1 non-renounceable pro-rata entitlement offer is partially underwritten for up to A$1.72m. Underwriters include FE Investments, Bailey-related entity Hippo Trustee Ltd, Copper Ltd, Blue Water Diving Ltd, among others.

Last year the company refinanced A$1.7m of term debt with FE Investments of which A$1.25m was rolled into convertible notes directly held by FE Investments. FE Investments has since used Wolfstrike Rentals Group as a vehicle for a backdoor listing on the ASX, and that merged entity is headed by Bailey.

In the rights offer booklet, published on the ASX this week, Tomizone flagged a number of risks. It noted the company has incurred significant losses and has yet to turn an operating profit and said "there is a risk that the company may not achieve profitability in the future at all". It also said there is a control risk of underwriters both as a whole and individually if there is any shortfall in applications under the entitlement offer. This could potentially allow the underwriters to "exert significant interest over matters relating to the company," it said.

For example, if Hippo Trustee Ltd, an entity associated with Bailey, acquires its maximum commitment under the underwriting agreement it would hold 13.6 per cent of the company.

Among other things, it pointed to the risk associated with its subscription bonds. Despite the fact that the maturity date of 75 per cent of the subscription bonds has been extended to August 2019, the company will still have A$3.36m in debt obligations and may be unable to repay them on the maturity date, Tomizone said.

The ASX-listed shares last traded at 1.8 Australian cents.