Eftpos company SmartPay is looking to address its debt to equity ratio with a new share purchase plan, launched a week after it confirmed it was outsourcing its manufacturing.The new plan allows each New Zealand based shareholder to apply for up to $15,00
Eftpos company SmartPay is looking to address its debt to equity ratio with a new share purchase plan, launched a week after it confirmed it was outsourcing its manufacturing.
The new plan allows each New Zealand based shareholder to apply for up to $15,000 new SmartPay shares at 3.3356 per share, the same price offered under a recent private placement and a discount of more than 16% on the recent average price.
SmartPay’s shares (NZX:SPY) were sitting at 3.6c at midday, having fallen 0.3c in morning trading.
Under the plan, Smartpay can issue new shares equal to 30% of its current issued share capital.
Managing director Ian Bailey said the plan was open ended and the company did not have a specific dollar figure in mind for it. He said the main goal was to give existing shareholders the chance to increase their stake at a lower price.
Any capital that will be raised from the plan will be sued to address its debt issues, according to Mr Bailey.
“The company has grown significantly and has been funded mainly by debt, with a small amount of new equity. SmartPay needs to address its debt to equity ratio in order to access more conventional funding lines from banks and move away from high priced mezzanine debt. This capital raising will help achieve this goal.”
The capital raising is another step in the company’s ongoing restructuring of its business. Last week, it confirmed that it was going to outsource the manufacturing of its eftpos terminals, with the loss of about 40 jobs.
Mr Bailey said SmartPay had turned a corner in recent years after a long period of losses, with the purchase of the payments business of ProvencoCadmus in August last year bringing another dimension to the business.
It is forecasting ebitda for the year ending March of between $1.5 million and $2.1 million - a $4.5 million swing into profit - and between $7 million and $10 million for the March 2011 year.
Applications under the SPP will close at 5pm on June 16 and share allotments will occur a week later.
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