Billionaire small-cap investor Alex Waislitz has launched an extraordinary attack on emerging technology company Dubber as it prepares to ask investors for more capital to back development of its cloud call-recording software.
Dubber shares went into a trading halt on Thursday ahead of capital raising expected to be worth at least $5 million, priced around 35c a share compared to its last closing price of 41c. The shares have risen from 18c since the end of June.
But critics claim the raising comes after Dubber said previously it did not need to raise extra capital.
Mr Waislitz’s private Thorney group and listed Thorney Technologies hold 7 per cent of the company, but this stake will fall to 6 per cent after the capital raising in which Thorney will not participate.
“Despite having a voice call-recording product and a market opportunity with great potential, we believe the company is yet to demonstrate an ability to execute its strategy, improve its governance and maintain an effective communications approach to shareholders,’’ Mr Waislitz said in his latest chairman’s note to shareholders of Thorney Technologies.
“While Dubber has engaged with a number of global telecommunications companies, the company has not yet managed to achieve its stated revenue targets. At the same time, we are concerned that it appears to be burning cash at an alarming rate.’’
He said Dubber had been one of the few disappointing investments for Thorney Technologies, which listed on the ASX earlier this year.
“We have made consistent efforts to engage with Dubber and have strongly recommended significant changes to their board to better position the company. To date progress has been less than satisfactory,’’ Mr Waislitz’s note said.
“For example, one newly appointed director resigned after only a few months and the other has a close relationship with the existing CEO.
‘‘In our view there is a clear and urgent need for further changes in Dubber’s leadership if the company is to achieve its potential.’’
A spokesman for Dubber said the company did not wish to provide any comment directly on the Thorney statement, but it is understood the firm is disappointed in Mr Waislitz’s comments.
“The Dubber management team is very comfortable and confident with its commercial execution plan, in the last quarter having announced major new engagements with one of the world’s largest telecommunications carrier AT&T, a significant agreement with global unified communications leader BroadSoft and CDK Global, one of the world’s largest providers of IT and digital marketing services to the automotive industry,’’ the spokesman said.
In his chairman’s letter, Mr Waislitz also delivered a fresh broadside to stem cell company Mesoblast, which Thorney has long supported.
“We believe that while Mesoblast has done its scientific development well, its capital management has been poor. It has raised funds at times when its share price has been low rather than when it has been at higher levels and as a result we would like to see more capital management expertise, cashflow discipline and commercial skills at board and management level,’’ he wrote.
“Nevertheless we remain very supportive of MSB’s science and keenly await the announcement of new partnerships or licensing deals which MSB can deliver on its long-held promise. Ultimate success would not only reward the patience of investors but make a real difference to the lives of suffering patients.’’
Mesoblast shares have more than halved in value over the past five months. In August, it raised $38m from investors to provide fresh funds to go towards the ongoing costs of the company’s research, with several treatments currently in Phase 3 trials.
Thorney Technologies itself last week raised more than $10m through Bell Potter from its star-studded investor base to provide the company with more capital to invest in technology opportunities.
Mr Waislitz took $2.5m of the oversubscribed issue.
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