The Sezzle Inc (ASX: SZL) share price won’t be going anywhere on Friday and will remain in a trading halt.
Why is the Sezzle share price in a trading halt?
Sezzle shares have been placed into a trading halt while it takes advantage of a sharp rise in its share price to undertake a capital raising.
According to the release, the buy now pay later platform provider is aiming to raise approximately $86.3 million (US$60 million) to accelerate its growth strategy and strengthen its balance sheet.
Sezzle’s capital raising comprises a fully underwritten institutional placement to raise $79.1 million US$55 million and a non-underwritten share purchase plan (SPP) that aims to raise approximately $7.2 million (US$5 million).
The Afterpay Ltd (ASX: APT) rival advised that the pricing of the placement will be determined via a bookbuild process with an underwritten floor price of $5.00 per share.
This floor price represents a sizeable 28.1% discount to the last traded price of $6.95. It is also a 10% discount to its five-day volume weighted average price of $5.56 on 9 July 2020.
The company’s Executive Chairman and CEO, Charlie Youakim, commented: “Our strong 1H20 performance, improving consumer profile, and confidence in reaching an annualized run rate for UMS of US$1 billion (A$1.4 billion) by the end of 2020 allows us to be uniquely positioned to further expand through a number of near-term growth initiatives. Importantly, this capital raising will give us the ability to invest in these initiatives as well as fortify our balance sheet.”
How will the money be spent?
Sezzle revealed that its key priorities for the funds include investments in sales and marketing and product enhancement.
It also has its eyes on international expansion opportunities and plans to use the funds to support further market development in Canada and low cost testing in other markets.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post Sezzle share price halted as it undertakes $86.3 million capital raising appeared first on Motley Fool Australia.
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