Shareholder campaign forces IT capital to find plan B

By ELLEN READ

Pressure from shareholders has forced tech investor IT Capital to revamp its lifesaving capital-raising plans.

The company said yesterday that it could not complete its $3.7 million capital-raising plan - approved by shareholders - because a number of investors that had committed to the plan had been "scared off".

It said they were deterred by a campaign run by the chairman of the Shareholders' Association, Bruce Sheppard, to derail the strategy.

Instead, the company said it had secured $2.1 million in capital, $1.6 million less than originally sought, which meant only two of three proposed acquisitions could proceed.

The company will buy 70 per cent of Sealegs International and 50 per cent of Conceptual Solutionz for a total of 87.5 million shares.

It will not proceed with the proposed investment in Datasquirt.

"We're delighted at finding a way forward in spite of the events of the last few weeks," chairman John Robertson said.

"The board and management team have worked for six months to get to this point, and I believe we now have a positive future to look forward to," he said.

Robertson said the company had a highly skilled and motivated management team, new additions to its investment portfolio and new capital.

"I'd like to think that as a company, shareholders and management are now ready to move forward and work towards our common goals," he said.

Approvals required to make the proposal unconditional are expected within the next few days.

McKee Wright said these were legal processes and that it was unclear at this stage whether a shareholders' meeting would be needed to approve the revised deal.

IT Capital shareholders "almost unanimously" approved the $3.7 million share placement at a meeting in Auckland last week.

At that meeting, chief executive David McKee Wright said the company had no plan B and only enough cash to last a month.

Also at the meeting, Sheppard questioned the plan to raise $3.7 million and issue 137.5 million shares at 4c each to McKee Wright and director Maurice Bryham, who were to bring their interests in three start-ups, worth $5.5 million, into the IT Capital fold.

Sheppard took issue with the Grant Samuel independent appraisal of the company, which valued IT Capital at 4c a share.

He said a valuation of 6c to 7c was more accurate, and believed Bryham and McKee Wright should not be issued more than 40 million shares for their investments.

IT Capital's only strategic asset is Hamilton's Deep Video Imaging, a 3D screen developer that has won a contract in the United States but is not expected to be profitable for several years. IT Capital shares closed up 0.5c at 4c yesterday.