The EML Payments Ltd (ASX: EML) share price is shooting out the lights today.
Shares in the global payments company closed yesterday trading for 74.5 cents. In morning trade on Thursday, shares are swapping hands for 94.5 cents apiece, up 26.9%.
For some context, the All Ordinaries Index (ASX: XAO) is down 0.9% at this same time.
Here's what's happening.
Why is the All Ords payments company rocketing today?
The EML share price is soaring after the company reported that its PFS Card Services Ireland Limited (PCSIL) segment will be closed to new business and wound down in a professional and orderly manner. This action was recommended by the reconstituted board of PCSIL.
On 29 November, the company reported PCSIL was haemorrhaging cash along with seeing its operations restricted by the Central Bank of Ireland. The EML share price closed the day down 29.7%.
EML said that a liquidator has been provisionally appointed by the High Court of Ireland to immediately begin the wind-down.
On the positive front, the company noted this will end its ongoing "significant earnings losses, cash burn and management distraction from operating PCSIL".
EML said its remaining exposure to PCSIL is now limited to:
- Approximately $20 million of cash outflow, being the repayment of intercompany balances.
- Approximately $25 million non-cash impairment to EML's FY 2024 financial accounts, representing the removal of net assets of the PCSIL business and any associated intangibles.
The EML board said it believes the wind down is in the best interests of its shareholders, and it isn't expected to impact the company's FY 2024 guidance, released on 29 November. And judging by today's share price action, investors vehemently agree.
Management said EML's other businesses, including its European Gift and Incentive (G&I) business and UK general purpose reloadable business won't be impacted by the PCSIL wind down.
Commenting on the decision that's sending the EML share price soaring, chairman Luke Bortoli said:
Following a detailed analysis, the PCSIL board has made the decision to wind down PCSIL with the support of the EML board… PCSIL is not commercially viable for future investment, and this decision will allow EML to redirect management resource and capital to our core businesses.
EML share price snapshot
With today's big intraday lift factored in, the EML share price is up 41% in 12 months.
