The market may have pushed notably higher on Thursday but the Splitit Ltd (ASX: SPT) share price missed out on the positive investor sentiment after the buy now, pay later platform provider’s shares were placed in a trading halt this morning.
Why are Splitit’s shares in a trading halt?
Splitit requested the trading halt pending an announcement in relation to a proposed capital raising. Its shares are expected to be offline until the commencement of normal trading on Monday.
According to the AFR, Morgans has launched an equity raising for Splitit with the intention of raising $30 million via a placement of shares at a price of 80 cents per share.
This is a discount of approximately 16% to its last close price of 95 cents, but three times the price that Splitit listed at earlier this year.
In addition to this, existing shareholders will be given the opportunity to pick up shares at the same price. The report explains that Splitit will be undertaking a share purchase plan to raise a further $10 million at the same price.
And finally, the broker is on the lookout for a buyer of approximately 2.6 million shares owned by the company’s co-founder and partnerships executive Alon Feit. The director is looking to offload them at 80 cents per share.
Why is Splitit raising funds?
The report explains that Splitit intends to use the money raised to fund an increase in sales staff costs, product manufacturing and operating costs, advertising and marketing, other staff costs, administration and corporate costs, and research and development.
Sales staff will be the biggest outlay, with $14.7 million of the funds being directed this way, potentially indicating that the company wants to compete harder with the likes of Afterpay Touch Group Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P).
Late last month the company released its first quarter update which revealed that it added 57 new retailers to its platform to take the total to 437. It also reported that it transacted with 42,000 new shoppers during the quarter, taking the total number of Unique Shoppers to 160,000 at the end of the period.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.