Mobilarm (MBO) is turning to shareholders for an additional $1.7 million to build a rental business for its man-overboard beacons and life jackets.
The developer of a new generation of locator beacons that help pinpoint the exact location of someone who has fallen into the ocean is undertaking a one-for-seven non renounceable entitlement offer priced at 4 cents a new share.
It remains to be seen how well supported the rights issue will be given that its chief executive, Ken Gaunt, has so far failed to put many runs on the board since he took over 18 months ago.
There has been some improvement in the business but expectations have not been met given the ambitious promises made by Gaunt when he took on the role.
He may yet deliver a pleasant surprise when the company hands in its full-year earnings report card later this month, but Mobilarm has not made a compelling argument in support of the capital raising.
The funds from the raising are to help Mobilarm build an inventory of products it can rent out. Nigeria is its key market as the government in that African nation has mandated the use of locator beacons for all offshore oil and gas workers.
Mobilarm is the only approved device in Nigeria but despite the mandate, the take-up rate for the beacon has been slow.
The company believes having a rental business will drive adoption and generate recurring revenue, and shareholders will at least be pleased that the raising is underwritten up to $1.3 million by UK based Truestone Capital.
Mobilarm is part of the Uncapped 100. The illiquid stock last traded at 6 cents.