Here's why the Pioneer (ASX:PNC) share price raced 23% higher on Monday

The company is set for a big FY22…

| More on:
kid riding a plastic go kart with his hands raised in the air with mountains in the background symbolising winning a race

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Pioneer Credit Ltd (ASX: PNC) share price has come out of a trading halt to accelerate to a 2-month high today. The financial service provider announced two positive updates which had led investors to load up on its shares.

At one point during early afternoon trade, Pioneer shares rose as high as 60 cents apiece. However, after some profit-taking, its shares have retraced to close at 58 cents, up 23.40%.

What did Pioneer update the ASX with?

In its release, Pioneer advised it has secured a $200 million four-year senior debt facility agreement with Fortress Investment Group.

In addition, the company amended the expiry date for its medium-term notes until 2026 and increased the size to $60 million.

It is expected that both the senior debt facility along with the medium-term notes will reduce Pioneer's cost of funding. This will provide the company with ample firepower to pursue growth opportunities. The $260 million of senior and subordinated facilities frees up $32 million on the balance sheet.

Pioneer managing director, Keith John commented:

Upon completion, we expect Pioneer's enhanced capital structure will return the business to profitability.

By introducing flexibility into our balance sheet, we will be able to aggressively compete in the acquisition of PDP's1 and firmly establish Pioneer as the top challenger brand in the industry.

Furthermore, our demonstrated ability to grow the Pioneer performing arrangements portfolio will continue to drive liquidations and realise the value of our future investments.

Pioneer also completed a $5.4 million capital raise to boost its liquidity profile. Institutional and high-net worth investors took part in the offer.

The company issued each share at a price of 60 cents each. This represents a 27% premium on last Thursday's closing price of Pioneer shares at 47 cents.

The Company revealed a significant turnaround for FY22 and expects earnings growth for years to come.

Earnings before interest, tax, depreciation and amortisation (EBITDA) is projected to be more than $59 million. This is $5 million more than what was achieved in FY21.

Net profit after tax (NPAT) is also expected to rise to $1.5 million, up from a negative $19 million the year before.

Pioneer share price summary

Over the past 12 months, Pioneer shares have lost around 20%. Year-to-date hasn't been so positive, with the company share price flat for the period.

Based on valuation grounds, Pioneer presides a market capitalisation of roughly $38.56 million, with 71.4 million shares on issue.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Financial Shares

A man with long hair and tattoos holds out an EFTPOS payment machine from behind a shop counter.
Financial Shares

1 dirt-cheap ASX stock I'd buy as Aussie cash carrier looks for a lifeline

Every crisis comes with an opportunity. I reckon this payments company is in the buy zone as cash crumbles.

Read more »

A young male investor wearing a white business shirt screams in frustration with his hands grasping his hair after ASX 200 shares fell rapidly today and appear to be heading into a stock market crash
Financial Shares

Why is this ASX 300 stock crashing 23% today?

Shareholders of this stock have been hit with some bad news.

Read more »

Happy man working on his laptop.
Financial Shares

3 things about AFIC stock every smart investor knows

These are underrated factors about the LIC.

Read more »

Frazzled couple sitting out their kitchen table trying to figure out their finances or taxes.
Dividend Investing

Here's the AMP dividend forecast through to 2026

There is some good news for AMP shareholders.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Earnings Results

Soul Patts share price struggles on falling profits

ASX 200 investment house Soul Patts reported its half year results this morning.

Read more »

Financial Shares

Buy this ASX All Ords stock for a 15% gain and 9% dividend yield

Goldman Sachs is tipping big returns from this stock.

Read more »

Man pointing at a blue rising share price graph.
Financial Shares

Big ASX news: Macquarie share price hits new 52-week high

It's been a great day to own Macquarie shares...

Read more »

a woman wearing a dark business suit holds her hand up in a stop gesture while sitting at a desk. She has a sombre look on her face.
Financial Shares

Guess which ASX All Ords stock is suspended amid takeover rumours

Another ASX share is rumoured to have received a takeover offer.

Read more »