After The Red Faces, Redflex Finds Cash For Us Expansion
The Age
Friday December 27, 2002
Traffic-management equipment maker Redflex has overcome the embarrassment and chaos of its recent annual meeting and secured enough cash to fund its continued growth in the US.
Investors responded positively to the news, driving up the share price six cents, or 10.7 per cent, to 62 cents on Christmas Eve.
Directors announced they had rounded up $16 million in working capital from three sources, including a trading bank in Australia. The cash raised would allow the company to install the backlog of 115 cameras for which it already held contracts, managing director Graham Davie said.
That will more than double Redflex's installed base of 104 cameras in the US.
The company needs the cash upfront because most municipalities want the systems supplied on a build, own, operate basis, which means the company has to fund the installation before receiving any revenue.
Mr Davie said another funding plan put up by former directors in September had been shelved. It involved a loan of $US3 million ($A5.33 million) plus the right for the lender, an affiliate of Macquarie Bank and Pratt Industries, to take a 15 per cent stake in the US operation, set to be Redflex's top earner.
Completion of the deal was constantly deferred. The then chairman of Redflex, Phil Scanlan, had been responsible for striking the deal with the jointly owned company MPI Private Trustee. He refused to stand for re-election at the recent annual meeting, along with two other directors, apparently in protest at the refusal of Redflex's major shareholders to agree to the loan deal with MPI.
The other two directors to withdraw their nominations were the longest-serving director, Lord John Gilbert, a member of the Privy Council and former British minister for defence procurement, and David Heaney.
Their withdrawal from the ballot threw the meeting into chaos, with small shareholders struggling to grasp what was going on.
It was the second time in two years at Redflex that directors had quit or not stood for re-election at the annual meeting.
Mr Davie said the $16 million had been raised through a share purchase plan for existing shareholders, share placements, and a $US3.3 million loan from National Australia Bank after it had conducted a due diligence examination of Redflex.
Mr Davie said existing and new shareholders had subscribed for placements at 46.26 cents a share, raising $8.7 million. The share purchase plan raised a further $1.5 million.
``The level of support from existing shareholders and the general investment community is very gratifying, and highlights the potential of the Redflex traffic and communications businesses in global markets," Mr Davie said.
© 2002 The Age
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