Zip Co Limited Launches Share Purchase Plan to Raise Additional Capital
ZIP (ZIP) Share Update July 2024 Wednesday 24th
Zip Co Limited Announces Share Purchase Plan to Raise Up to A$50 Million
Zip Co Limited (ASX: ZIP) has announced a Share Purchase Plan (SPP) aimed at raising up to A$50 million, following a successful placement that raised A$217 million.
Instant Summary:
- SPP aims to raise up to A$50 million.
- Eligible shareholders can apply for up to A$30,000 of new shares.
- New shares will be issued at the lower of A$1.56 or a 2% discount to the 5-day volume weighted average price.
- No brokerage, commission, or transaction costs for shareholders.
- SPP offer opens on 25 July 2024 and closes on 14 August 2024.
Details of the Share Purchase Plan
Zip Co Limited (ASX: ZIP) has launched a Share Purchase Plan (SPP) to raise up to A$50 million. This follows a fully underwritten placement that raised A$217 million before costs. The SPP offers eligible shareholders the opportunity to apply for up to A$30,000 of new shares without incurring any brokerage, commission, or transaction costs.
New shares under the SPP will be issued at a price per share equal to the lower of A$1.56, which was the price under the placement, or a 2% discount to the 5-day volume weighted average price of Zip’s shares on the ASX up to and including the closing date of the SPP on 14 August 2024.
Eligibility and Application Process
To be eligible, shareholders must have a registered address in Australia or New Zealand and be on Zip’s register as of 7:00pm (AEST) on 16 July 2024. Eligible shareholders will receive details on how to apply for the SPP through electronic communications or postal mail, depending on their communication preferences.
The SPP offer opens at 10:00am (Sydney time) on 25 July 2024 and closes at 5:00pm (Sydney time) on 14 August 2024. The results of the SPP will be announced on 19 August 2024, with settlement and allotment of new shares expected on 21 August 2024. The new shares are expected to commence trading on the ASX on 22 August 2024.
Use of Funds
Proceeds from the SPP and the earlier placement will be used to repay Zip’s existing corporate debt facility and associated exit fee. This will support the optimization of Zip’s capital structure and provide greater flexibility for future growth. Shareholders are encouraged to read the SPP Offer document carefully and consult with financial or other professional advisers if in doubt about participating in the SPP.
The SPP is expected to provide Zip Co Limited with additional capital to strengthen its financial position and support future growth initiatives. The offer price, set at a discount, may attract significant shareholder participation, potentially leading to a positive impact on the stock price. However, the dilution of existing shares could also affect the market perception.
Investor Reaction:
Initial reactions from investors and analysts have been positive, with many appreciating the opportunity to purchase shares at a discounted rate. Some investors have expressed concerns about potential dilution, but overall, the sentiment appears to be optimistic about Zip's growth prospects.
Conclusion:
Investors should consider participating in the SPP to take advantage of the discounted share price and support Zip Co Limited's strategic initiatives. Monitoring the final results of the SPP and the company's subsequent performance will be crucial for assessing the long-term impact on their investment portfolios.