Vmoto raises $4.2m via placement

Scooter manufacturer Vmoto has raised $4.2 million via a placement at half the price of a capital raising announced in October after failing to secure a $5 million loan.

Vmoto issued 70.2 million shares at an issue price of 6 cents per share to sophisticated investors.

Today in a statement to the Australian Securities Exchange, the company said it had decided to proceed with the capital raising because the non-bank lender couldn't confirm drawdown availability.

"The decision by the Board to move forward with the placement (and the pricing of that placement) was a difficult one," the company's statement said.

"However, the Board is of the belief it was the most prudent course given the continuing uncertainty concerning both the performance of the lender and, if the lender was to perform, the timing of such performance."

The lender and Vmoto reached the agreement on October 15 to allow the company to increase its manufacturing capacity and capability.

Earlier this month, Vmoto said that the lender had been, "unable to make funds available for drawdown by the company by 30 November 2010, as agreed."

Executive chairman Russell Goodman said "The placement has not only replaced the funds expected from the debt facility but, pleasingly, has introduced new long term professional investors to the Company's register."

On October 15, Vmoto also announced the placement of 8.3 million shares at an issue price of 12 cents per share in two tranches to raise $1 million.

See company statement below:

Further to those announcements dated 1 and 3 December 2010, Vmoto Limited ("Vmoto" or "the Company") is pleased to announce that it has successfully raised approximately $4.2 million from the placement of approximately 70.2 million shares at an issue price of 6 cents per share to sophisticated investors.

The placement has been completed pursuant to ASX Listing Rule 7.1

The decision to proceed with an equity issue was made as a result of the inability of the non-bank lender to confirm drawdown availability in accordance with the facility terms (the details of which were announced to the market on the 15 October 2010).

Executive Chairman Russell Goodman said "The placement has not only replaced the funds expected from the debt facility but, pleasingly, has introduced new long term professional investors to the Company's register."

Consistent with the intended purpose of the $5 million debt facility, the funds raised via the equity placement will be used primarily to increase manufacturing capacity and capability and to complete Stage 2 of the Company's Chinese manufacturing facility, which remains on schedule for commissioning by the end of February 2011.

The decision by the Board to move forward with the placement (and the pricing of that placement) was a difficult one. However, the Board is of the belief it was the most prudent course given the continuing uncertainty concerning both the performance of the lender and, if the lender was to perform, the timing of such performance.

Changes to the equity placement announced on 15 October 2010
On 15 October 2010, in conjunction with the announcement of the non-bank debt facility, the Company announced that it had received firm commitments from sophisticated investors to subscribe for equity in Vmoto in an amount of $1 million (via the issue of 8,333,334 fully paid ordinary shares at an issue price of 12 cents per share). This issue was to occur in two tranches. The first tranche ($500,000) of this placement was completed on 15 October 2010.

The commitments from the sophisticated investors to participate in the placement were obtained on the express understanding that the placement was to occur in conjunction with the raising of additional funding for the Company via the $5 million debt facility.

As the lender has not performed, the fundamental premise underpinning the $1 million placement has not been met by the Company. In fairness to the investors participating in that placement, the Company has agreed to amend the terms of the placement as follows:
- Tranche 2 of the placement ($500,000) has been cancelled;
- the Company has agreed (subject to shareholder approval (if required)) to issue 4,166,667 free shares to the investors. This share issue will have the effect of reducing the average price per share paid by those investors under tranche 1 of the placement to 6 cents per share i.e. the same price per share as paid by the investors in the current placement referred to hereinbefore.

Further, to ensure that the full amount originally sought to be raised under that placement is in fact subscribed, the relevant investors will subscribe for tranche 2 of the previously announced placement by committing $500,000 as part of the placement of 70.2 million shares announced today.

Company review
The Company is now well capitalised. The Board can now devote its full energies to finalising the previously announced review and renewal process.

Vmoto will provide a further update to the market in the near term.