Ailing WANdisco has pulled off the key event necessary for its recovery – raising $30 million – and is applying to have its share trading suspension lifted.
The replication software company faced running out of cash later this month following a devastating deception by a senior sales exec who inflated their sales orders in 2022 such that reported $24 million revenues were actually $9.7 million. The discovery of this in March caused exec exits, share trading suspension, forensic accountancy, and the recruitment of CEO Stephen Kelly and CFO Ijoma Maluza.
Investors faced the company collapsing and losing their cash. Incoming chairman Ken Lever brought in Kelly, a major WANdisco investor himself, and Maluza, to set about discovering the true state of the business, stabilizing it, and working out how, and if, it could recover and move forward.
Stabilization included a 30 percent headcount cut, about 50 people, and other cost-saving measures to reduce its cost base from $41 million to around $25 million.
Top brass also had to persuade the existing investors that recapitalizing the company was the most practical way to not only restore the value of their shares but potentially increase it. Prior to suspension, shares traded at £13.10 ($16.68). Persuasion worked and a total of 21,566,527 new Ordinary shares, priced at 50p ($0.64) each, were placed, the company said today. The stock was not available to the general public as WANdisco is a Jersey-incorporated company and Jersey could not provide the necessary documents for a retail (public) cash raise to take place before WANdisco ran out of money.
Kelly himself bought 850,000 of the new shares. Chairman Ken Lever put in for 200,000 while CFO Maluza bought 3,000. Co-founder, ex-chairman and ex-CEO Dave Richards, who led the company until earlier this year, owned 2.7 percent of WANdisco’s ordinary shares, 1,836,867 of them, at the end of 2022. It is not known if he contributed to the fundraising.
WANdisco now has to pick itself up by the bootstraps. It will publish its formal 2022 accounts in a day or so and expects share trading to resume on July 7.
Kelly and Maluza are working on a turnaround plan “to reposition the business for the future and which aims to deliver organisational stability, credibility, customer satisfaction and revenue growth.” They say WANdisco has two differentiated product sets: Application Lifecycle Management (ALM) and Data Integration (live data replication) which includes migrating data to the public cloud.
“The key growth for the Group is expected to come from Data Migration with Tier 1 Cloud Partners,” the company said.
The Data Migration products have a claimed petabyte scale, zero latency, heterogeneous cloud environment capability and a fast time to value. They are supported by 91 patents (registered and pending).
Fiscal 2023 revenues will be impacted by the turnaround plan but “strong year on year growth [is] expected in FY24, and cash break even targeted to occur during FY24 to FY25.“
Kelly is working on renaming the company as the WANdisco brand is now tarnished by recent events. The results of this work should be revealed by the company’s next AGM.
Bootnote
WANdisco has never made a profit in the 20 years since its 2005 founding. It went public on the UK AIM market in June 2012 with shares priced at £199 ($253), rising to an incredible £1,520 ($1,934) in December 2012. The hype started dissipating with a price plunge starting in December 2014. Shares fell to £284 ($361) a year later, and £176 ($224) in October 2016. Those seem like heady days now.
