ELECTRONIC PAYMENTS group Payzone expects to lose €30 million this year, and is planning to raise €40 million from investors by issuing new shares.
Payzone, formed by the merger of Irish company Alphyra and the British business Cardpoint, has just emerged from a troubled period during which shareholders voted to sack its chief executive, John Nagle, and financial officer John Williamson in March.
The men went to the High Court following an attempt to dismiss them in January.
Payzone suspended its shares from trading on London's Alternative Investment Market (AIM) at that point.
The shares were reinstated yesterday.
The company issued a statement yesterday warning that it is expecting to lose €30 million before tax in the 12 months to next September 30th.
Payzone's trading update said challenging trading conditions, the integration of Cardpoint and Alphyra, and the court action that preceded the sacking of its executives, had had an impact on its business.
The predicted loss includes a once-off payment of €13 million. Payzone said its forecast is based on the company raising a net €37 million from its share placing.
The company intends to place 137.3 million new ordinary shares at 20 pence (25.13 cent) each, which will raise €34.5 million.
It will raise the balance of the €40 million by placing 5.5 million convertible preference shares at £1 each.
Payzone needs shareholders to agree to a special resolution that will allow the company to dis-apply their pre-emption rights.
It plans to hold an extraordinary general meeting at the Davenport Hotel in Dublin on June 16th to put the resolution to its shareholders.
The group also said yesterday that the placing was conditional on it raising a minimum of €40 million from the ordinary and preference stock that it intends issuing.
Payzone's new chief executive, former BT Ireland operations head, Mike Maloney, said the fundraising would put the company on a firm financial footing from which to take the business forward.
"Following a challenging few months operationally for the company, we are now in a position to invest significantly in the business, to implement a three-year growth plan and to capitalise on Payzone's strong market positions throughout Europe," he said.
The company's statement said that Payzone will use the placing's proceeds to the strengthen the business and to invest for future growth.
The group added that the board believes the cash raised will be enough to allow it to fund its immediate working capital requirements and its medium-term spending plans.
NM Rothschild and Panmure Gordon will act for the company in the placing.
Payzone produces technology that provides services such as chip and pin over the counter payments for credit and debit cardholders.
