Rights Issue for Preference Shares

Windflow Technology is ready for an increased commercial drive into the UK market.

 

NZX and Media Statement

18 February 2013

Rights Issue for Preference Shares

Windflow Technology is ready for an increased commercial drive into the UK market with its proven wind turbine and has registered a prospectus and investment statement (Offer Document) to raise up to $5.1 million expansion capital.

The Offer Document contains up to date information about the Company and the terms of an attractive investment opportunity, bearing preferential dividends at 10.0% per annum. Eligible Shareholders are being issued renounceable rights to subscribe for one new redeemable convertible preference share (Preference Share) at $0.50 per Preference Share for every two existing ordinary shares (Ordinary Shares) held by them in the Company as at the Record Date (25 February). The 10.0% p.a. preferential dividend is considered an attractive rate of return in an environment of lower returns for investors seeking income.

Public investors who are not already shareholders in Windflow will be able to access the investment opportunity through trading on the NZAX of the rights to the Preference Shares (Rights Entitlement) between 21 February and 8 March.

Building on the Companys success to date in engineering design and manufacturing, Windflow Chairman Michael Chick says, the funds raised from this rights issue will strengthen the Company financially and increase the Companys ability to achieve on-going sales, both by recruiting new staff and investing in turbine hardware. I believe this is critical in order to ensure the Company can realise its opportunities and achieve commercial success.

Windflow Technology has this summer become an exporter of its successful wind turbine. During the past week it has completed the installation of its first turbine in the UK, having erected it in early February on Westray, one of the Orkney Islands. Rotating testing has been substantially completed, and the turbine is ready to start exporting power to the grid once the grid connection is completed in the coming weeks.

Windflow Technology is continuing to develop a productive relationship with General Dynamics SATCOM Technologies. This division of the NYSE-listed General Dynamics is licensed to make, use and sell the Windflow 500 turbine in the Americas and Africa. The two companies have been working together on sales opportunities for the Class 1A GD500, while jointly developing a larger Class 2A turbine (forecast for first sale at the end of 2013) to increase significantly the addressable market in areas with lower wind speeds. http://www.gdenergysolutions.com/

The Offer Document was registered on 12 February and is presently being reviewed by the Financial Markets Authority. It will be printed and distributed to shareholders once that review is complete. Information evenings will be held in the main centres from about 28 February onwards and the rights issue will close on 14 March.

The Preference Share price of $0.50 has been calculated taking into consideration the terms of the Preference Share including the expected returns from the 10.0% preferential dividend and the potential conversion rate to Ordinary Shares. The Preference Shares can be converted to Ordinary Shares (at the Companys or the shareholders option). Having considered the valuation for the Preference Shares and the ability of the Company to convert the Preference Shares to Ordinary Shares, the Company has decided to set the conversion rate at two Ordinary Shares for each Preference Share if the Company exercises its option, whereas the conversion rate is one for one if a shareholder exercises its option.

The indicative timetable for the Offer is as follows; 
Rights trading period: 21 February - 8 March 
Record Date for entitlements: 25 February 
Offer Document mailed to Eligible Shareholders: 26 February 
Opening and Closing Date of Offer: 27 February - 14 March 
Allotment of new shares: 21 March

For a copy of the Offer Document, please contact Windflow Technology Limited at the contact details listed above. For further information: Geoff Henderson, CEO/Director, phone 03 365 8960.

Application has been made to NZX for permission to list the Rights Entitlements and all the requirements of NZX related thereto that can be complied with on or before the date of the Offer Document have been duly complied with. The NZAX is a registered market operated by NZX Limited, a registered exchange regulated under the Securities Markets Act 1988. NZX Limited accepts no responsibility for any information contained in this statement.