Auckland energy efficient motor maker Wellington Drive Technologies is seeking $5 million of fresh funds using a pro rata Mandatory Convertible Preference Shares issue to its shareholders.

The capital will be used for regional expansion, customer growth and development of new products, it says. The company plans to launch a new smart controller and an advanced smart motor, and add customers to its portfolio this year, according to chairman Tony Nowell.

The company expects to issue the prospectus for the rights issue in early April. Major shareholder SuperLife and other institutional shareholders have committed to take up their entitlements and SuperLife will underwrite the balance of the issue, Wellington Drive says.

Wellington Drive CEO Greg Allen says the company has improved its gross margins from 5 percent to 19 percent and forecasts more margin improvement this year.

“Our operating processes are delivering repeatable and sustainable working capital performance, we are winning new customers and we have a high capability, low cost supply chain being implemented with our strategic partner East West,” he said. “We believe we now have a stable platform on which to win further new customers and deliver growth.”

SuperLife said it was satisfied with Wellington Drive’s progress in turning the company around in the past two years, adding it wanted to support the renewed growth plans.

In the full year result to 31 December, announced last month, Wellington Drive recorded a 23 percent revenue fall but a bigger profit of $5.13 million.

It reduced its loss for the year to $3.76 million from $6.33 million last year. Last March the company raised $4 million in a share placement which included SuperLife.