IRISH LISTED e-payments group Payzone warned yesterday that shareholders could have the value of their holdings wiped out as part of a planned financial restructuring with its lenders.
The loss-making company, which is listed on the Aim market in London, issued the stark warning to the market yesterday after a sharp fall in its share price on Wednesday pushed the stock to below one penny.
“The company can confirm that it remains in constructive discussions with its finance providers as part of its review of the options to establish a more appropriate long-term capital structure as announced on June 18th 2009,” Payzone said.
“The board remains confident that these discussions will lead to an appropriate long-term capital structure. In the meantime, the company’s debt providers remain supportive of the business and the company is not in default of its banking facility agreements.
“Any new capital structure for the company or the business may result in little or no value for shareholders of the company.”
Payzone’s net debt is about €290 million and it has been seeking to refinance this burden for some time. The debt is held with a syndicate of seven banks, led by Royal Bank of Scotland.
Payzone’s biggest shareholder is venture capital group Balderton Capital, which owns 54 per cent of the business. Former chief executive John Nagle, who was sacked in March 2008, is the company’s second-biggest investor.
Its market value is just £3 million. Payzone was created in December 2007 from the merger of Irish e-payments group Alphyra and UK ATM operator Cardpoint.
Its shares debuted on the market at 76 pence two years ago but continued poor trading, internal wrangling and the divestment of certain assets has seen its value diminish significantly in the intervening period. The company is led by chief executive Mike Maloney, whose brother Barry is a senior partner with Balderton.
In September, Payzone sold its mobile top-up businesses in Germany, Poland and the Netherlands to Quam Equity International for just €2.2 million. This was less than the businesses net asset value. Since that transaction, the share price has fallen by about 62 per cent.
This was the latest disposal by Payzone in a year. In October 2008, it sold its businesses in France, Italy and Spain for €20 million, and wrote off €4.2 million they owed it. In January this year, it sold its Open Loop gift business.
The Sandyford-based company has also made a number of staff redundant in a bid to cut costs.
