Splitit Ltd (ASX: SPT) shares are seesawing this morning following the company's announcement of an approved receivables funding facility. Following the release, the Splitit share price leapt 4.2% to an intraday high of $1.50.
At the time of writing, however, shares in the buy now, pay later (BNPL) company have retreated to $1.435, down 0.35%.
Image source: Getty Images
What did Splitit announce?
The Splitit share price is jumping about after the company reported it has secured a line of credit to fund its growth and capital management strategies.
According to its release, Splitit announced it has signed a US$150 million receivables funding facility with Goldman Sachs.
The newly approved line of credit not only doubles Splitit's existing credit facilities, but paves the way for significant expansion. With a term of three years, the revolving line of credit will be used to support growth in United States and European markets.
Splitit revealed it will provide support to merchants though funding, as well as implementing a structure to facilitate additional jurisdictions.
Pleasingly for the company, the loan is attracting a lower cost than its existing debt facilities. Splitit noted that relying less on the more expensive loans, and using Goldman Sacks' line of credit, will increase the company's gross margins in the long run.
Words from the CEO
Splitit CEO Brad Paterson commented on what the new receivables funding facility will do for the company. He said:
This large committed facility from Goldman Sachs is a key pillar of our Merchant Sales Volume growth strategy. Demand from merchants in the US and Europe for our funded model has never been stronger, and coupled with our existing strong balance sheet, we now have the foundations in place to accelerate our growth plans whilst also driving improved margins.
Splitit share price summary
Over the last 12 months, the Splitit share price has accelerated more than 180% on the back of rising demand for its services.
The company's shares suffered a short-term shock when COVID-19 hit international markets in March, sending its shares to an all-time low of 20 cents. However, following the Australian Government's stimulus packages, the Splitit share price roared back to life. The company's shares reached a record high of $1.93 in late August 2020.
Based on the current share price, Splitit commands a market capitalisation of around $650 million.
