Payzone plc
Payzone sells business to banks and Duke Street for less than outstanding debt, shareholders to lose stake in new co
Payzone (AIM: PAYZ) said it has agreed the terms of a debt and share capital restructuring with the group's banking syndicate and private equity group Duke Street. Receivers are being appointed and the company’s operating subsidiaries are being disposed into a newly formed company, to be controlled by Duke Street. Existing shareholders in Payzone will not have an ongoing interest in the business.
On completion, Duke Street will be the owner of all the operating subsidiaries of the company, which will continue to trade as usual and will maintain existing relationships with customers, suppliers and employees. None of the company's subsidiaries have been placed into administration or any other insolvency process.
"The actions announced today, in conjunction with the steadfast support of the banking syndicate and our new investor, Duke Street, will safeguard the future of the company's operating companies, secure over 500 jobs and allow our operations, our suppliers and our customers to continue with business as normal”, Payzone chief executive Mike Maloney said, “Regrettably, it has not been possible to provide existing shareholders with an ongoing interest in the business.”
The board said that the restructuring will to provide a more appropriate long-term capital structure. Following the restructuring, Duke Street will have a controlling stake in the new business and the amount of debt owing to the banking syndicate will be reduced from €320m to €82m.
In March 2009, Payzone appointed Rothschild to seek new finance for the business and instigated discussions with its finance providers to consider a range of financing options, with a view to establishing a more appropriate long term capital structure. Subsequently the company reduced its operations in Europe with the sale of its Mobile Top-Up businesses in Germany, Poland and the Netherlands and its Electronic Funds Transfer business in the Netherlands.
However, following a period of due diligence conducted by interested parties, the value of the company was assessed to be significantly below its existing senior debt level, accordingly the restructuring is unable to provide any value to existing shareholders, Payzone said.
Trading was suspended in Payzone’s shares on the AIM of the London Stock Exchange earlier this morning. The listing is expected to be cancelled following the completion of the transaction.
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