Redflex Finds $16m To Fund Us Sales
Sydney Morning Herald
Friday December 27, 2002
Traffic management equipment maker Redflex has overcome the embarrassment and chaos of its recent annual meeting and secured cash to fund its growth in the US.
Investors responded positively to the news, driving up the share price up 6c to 62c on Christmas Eve.
Directors announced they had rounded up $16 million in working capital from three different sources, including a major trading bank in Australia.
The cash raised would allow the company to install the backlog of 115 cameras for which the company already held contracts, managing director Graham Davie said this week.
That will more than double Redflex's installed base of 104 cameras in the US.
The company needs the cash 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 revenues.
Mr Davie said another funding plan put up by former directors in September had now been shelved. The deal involved a loan of $US3 million ($5.37 million) in return for yielding the right to the lender, MPI Private Trustee Ltd, an affiliate of Macquarie Bank and Pratt Industries, to take a 15 per cent stake in the US operation, destined to be Redflex's biggest earner.
Completion of the deal was constantly deferred. The-then chairman of Redflex, Phil Scanlan, had been responsible for striking the deal with MPI.
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 deal with MPI.
The other two directors to withdraw their nominations were the longest serving director, former British Minister for Defence Procurement Lord John Gilbert, 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 that Redflex had had directors resign or not stand for re-election on the day of 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 ($5.9 million) loan from the 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 46.26c 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.
Directors were pleased to have the NAB ``on board" and were looking forward to a long relationship with the bank, he said.
© 2002 Sydney Morning Herald
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