The Zip Co Ltd (ASX: ZIP) share price jumped 3% in morning trading, hitting a new 52-week high of $2.29, after the buy now, pay later stock announced it had completed its latest capital raising. It's currently up by 1%.
As shown on the chart above, the Zip share price has gone up by around 260% in 2024 to date.
It has been a huge turnaround for the business, and it has just finished improving the strength of its balance sheet. The latest move has been to optimise the buy now, pay later company's capital position.
Just over a month ago, the business launched plans to wipe out $267 million of debt, and in mid-May, the company said it had converted all outstanding Zip senior convertible notes into fully paid ordinary Zip shares, simplifying its capital structure.
Zip completes share purchase plan
The company announced today it had raised approximately A$50 million through the successful completion of an oversubscribed share purchase plan (SPP) after applications closed on 14 August 2024.
This SPP was carried out after the completion of a fully underwritten placement of A$217 million.
The buy now, pay later business has used the placement proceeds to repay its existing corporate debt facility and associated exit fee.
Zip plans to use the proceeds of the share purchase plan to support the "optimisation" of its capital structure and provide the company with greater flexibility with future growth.
According to Zip, the SPP received "strong support", with valid applications totalling approximately $85 million from 4,301 eligible shareholders. This was a participation rate of approximately 13% of eligible shareholders, representing 58.17% of eligible shareholdings. The average application amount was approximately A$19,800.
The issue price for these new shares is $1.56. Eligible shareholders who applied for $1,000 of new shares will not be subject to any scale back and will receive 641 new shares. Eligible shareholders who applied for more than $1,000 will be subject to a scale-back on a pro-rata basis. The remaining application money will be refunded.
Management comments
Zip Group CEO and managing director Cynthia Scott said:
There has been a high level of demand for the SPP and I would like to thank our existing shareholders for their ongoing support and confidence in Zip. The proceeds from the SPP will further optimise Zip's capital structure and provide additional flexibility to support future growth.
Zip share price snapshot
Over the past 12 months, Zip shares have increased by more than 500%.
