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Electronic motor company Wellington Drive Technologies won't reveal what caused the collapse of a multimillion-dollar investment deal, but says a new plan will give it all the money it needs.
Shareholders in the Auckland company voted this month to let American firm Source Vortex take a 33.4 per cent stake for $40 million.
Yesterday, a trading halt was lifted and the market was told the deal had fallen over after a third party investor, who had agreed to contribute about 85 per cent of the money, did not meet settlement obligations.
Chairman Shawn Beck said he could not give any more detail on what happened because of a confidentiality agreement.
"There really isn't much more to say to be quite honest," Beck said.
"I can't really comment on it, but no it's not something that we could have seen earlier."
Wellington Drive's shares closed down 9c yesterday at 48c.
On Saturday the company began talking to other potential investors about raising money it said it needed to accelerate growth.
"For us, that was when it became apparent we should look at an alternative," Beck said.
Under the new plan, 30 million 40c shares - the price approved for issue to Source Vortex - will be placed among six existing institutional shareholders.
The company was also planning a discounted, renounceable pro rata rights issue to all shareholders in the first half of next year, raising between $10 million and $15 million.
The placement did not require further shareholder approval and with the rights issue could raise up to $27 million in total.
This is less than the $40 million in the Source Vortex deal, but was still enough to meet investment plans of up to $20 million, Beck said.
"We have now with those two things ... fully funded that acceleration plan," he said.
"In one sense from a shareholder's point of view ... I kind of like the fact that we're raising only the amount that we need, so there's obviously less dilution."
The previous deal was designed to give Source Vortex an influential stake in the business, Beck said.
This month, Wellington Drive signed its first big order for North America. Beck said he did not believe the Source Vortex plan collapse would damage the company's credibility.
"The key thing is that the company is well funded, and that's principally what customers were interested in and what was holding them back and making them a bit reluctant."
But one analyst thought credibility would take a knock.
"The solution, although it makes sense and its very pragmatic, doesn't give the financial substance that $40 million in their balance sheet would have," he said.
In the year to June, Wellington Drive had a cash balance of $1.7 million and a net loss of $4.5 million. It lost $4.9 million the previous year.
Beck said it had no intention to raise any further money.
