Sealegs share issue approved

Amphibious boat builder Sealegs will start on a strategic expansion after shareholders approved today a $6.2 million share issue that will see Mauritius-based Avenport Investment take effective control of the company.

The issue of the 31 million shares valued at 20 cents per share was the only contentious item in the annual general meeting of the company, which saw the re-election of chief executive David McKee Wright and Christopher Dickson as executive and independent directors, respectively.

Eric Series was also appointed chairman. He's currently the chairman of Avenport, a board member of Mauritius-licensed Bramer Bank and a director of Canadian-based Fairmont Raffles Hotels International.

Mr Series replaced independent director James Hill who stepped down to deputy chairman.

Several shareholders voted against the share issue on the grounds it will dilute their shareholding and hand over virtual control of the company to Avenport which will now own 39.89 per cent of the company, up from 19.87 per cent.

Public shareholders hold another 40 per cent and 20 per cent is held by company executives and associated shareholders.

William Jonkers was among those who opposed the deal, saying public shareholders have been treated badly in this deal.

"Given the dominance now of Avenport and the executive, the other shareholders were more or less put aside and the future value of the shares is very much at risk.

"I believe that the Avenport offering of 31m shares is a blatant takeover and I regret that," Mr Jonkers said.

Mr Hill said he appreciated shareholder concern.

"We know that some major shareholders may not be willing to put in more equity into this company but they are willing to stick by. Some of them said give me a choice I'd make some capital commitment, but quite honestly that would not have been enough," Mr Hill said.

"When you get a cornerstone investor who can give you the money at market prices, so very low cost of raising capital, and still keep your other shareholders with the same net tangible asset, same level of value, its worth doing."

And Mr McKee Wright said "who owns the company is irrelevant".

"I don't think control of the company correlates with the performance of the company. What is relevant here is that we have capital to execute a plan and deliver good results. It's a public listed company, anyone can own it.''

Avenport brings an international focus and the $6.2 million raised will fund marketing, research and development, working capital and systems development.

Avenport representative Mitch Barrett said it will "respect the history of the company, the way it's been managed and carry on along those terms".

"We love the product. We appreciate that it is a New Zealand product and we think that like many other things in New Zealand it needs to go to the rest of the world sales wise.''

Sealegs reported a profit of $642,000 on revenue of $11.4 million for the year ended March 31, 2010 after reducing expenses by 50 per cent.

It was a vast improvement to the previous year's loss of $869,000 on revenue of $11.6 million.

- © Fairfax NZ News