What's going on with the IOUpay (ASX:IOU) share price?

The IOUpay Ltd (ASX: IOU) share price may be in a trading halt on Wednesday but the company is still in the news. Here's why…

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The IOUpay Ltd (ASX: IOU) share price may be in a trading halt but that hasn't stopped the company making announcements.

This afternoon the Malaysia-based buy now pay later (BNPL) provider responded to an ASX aware query.

Why is the IOUpay share price in a trading halt?

IOUpay requested a trading halt on Tuesday so that it could undertake its second capital raising in a little over three months.

As things stand, no details have been provided in respect to how much the company is aiming to raise and for what purpose. Based on what management has said today, it appears to be an opportunistic capital raising to take advantage of the recent surge in the IOUpay share price.

And what good timing, too! Had the IOUpay share price not been in a trading halt today, it would almost certainly have been sinking along with fellow BNPL shares Sezzle Inc (ASX: SZL) and Zip Co Ltd (ASX: Z1P) today.

At the time of writing, the Sezzle share price is down 11% and the Zip share price is down 12%.

What was today's announcement?

Earlier today the ASX Ltd (ASX: ASX) contacted IOUpay to quiz it on its capital raising.

The stock exchange operator notes that it contacted the company initially on Monday to ask if there were a reason for the spike in the IOUpay share price. The company responded by saying there was nothing that it was aware of.

Whereas the very next morning its capital raising was announced, which caught the eye of the ASX.

IOUpay has provided its explanation for how everything unfolded, which appears to have appeased the ASX.

"To set out the relevant chronology, IOU notes that it received a letter from the ASX titled "Price – Query" on 15 February 2021, to which the Company responded by way of letter on the same day, with that response being released to market by the ASX at 1.03 pm that day (the 'Price Query Response')."

"Later in the afternoon of 15 February 2021, after the release to market of the Price Query Response, IOU received an unsolicited proposal to conduct a capital raising. This proposal was not considered by the Board until an emergency meeting of the Board was convened in the late afternoon of 15 February 2021, after market close. The time of the meeting was as soon as practicable at short notice given the relative locations and time zones of some Board members. At this meeting, the Board agreed to accept the proposal to conduct a capital raising and finalise the terms on which it would seek do so over that evening and prior to commencement of trade 16 February 2021."

"Accordingly, it was not until after market close on 15 February 2021 that IOU had become aware that it was 'considering capital raising initiatives and opportunities' to the extent that would require disclosure to the ASX under Listing Rule 3.1."

"For the avoidance of doubt, IOU confirms that at both the time at which IOU sent the Price Query Response to the ASX and at the time of its release to market by the ASX, IOU was not in possession of any information which would warrant disclosure under Listing Rule 3.1 with respect to any capital raising initiatives and opportunities."

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia has recommended Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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