The Zip Co Ltd (ASX: Z1P) share price has returned from its trading halt and is sinking lower.
At the time of writing, the buy now pay later (BNPL) provider’s shares are down 4% to $9.23.
Despite this, the Zip share price is still up 65% since the start of the year.
Why was the Zip share price in a trading halt?
Zip requested a trading halt on Wednesday so that it could undertake a A$400 million senior unsecured convertible notes offering. These notes are convertible into fully paid ordinary shares of Zip and are due in 2028.
Zip’s Co-Founder and COO, Peter Gray, commented: “We are very excited to welcome a new group of global investors to the Zip ecosystem, embracing our journey and mission to be the first payment choice everywhere and every day.”
Mr Gray revealed that the funds will be used to support its international growth.
“The additional capital from this Offering will support the active pursuit of both core and international growth opportunities, as Zip becomes a truly global BNPL player, leveraging our very strong momentum and the worldwide shift away from the broken credit card, towards a better, fairer digital alternative,” he added.
Money in the bank
This morning Zip announced that it has successfully priced its $400 million zero coupon senior unsecured convertible notes.
It advised that the notes will mature on 23 April 2028 unless otherwise redeemed, repurchased, or converted in accordance with their terms and conditions.
According to the release, the notes are convertible into fully paid ordinary shares of Zip at an initial conversion price of $12.39 per share. This represents a conversion premium of 29% over the Zip share price prior to its halt.
Mr Gray said: “We are very pleased with the strong global demand for this Offering. This transaction further diversifies Zip’s sources of capital and allows us to pursue our global growth aspirations while reducing potential dilution of existing shareholders. Another fantastic outcome for Zip and its shareholders.”
Co-Founders sell shares
Zip also advised that its Co-Founders Larry Diamond and Peter Gray have sold a small portion of their holdings. They sold a total of 2 million shares in aggregate for $9.18 per share.
The proceeds from the sale will be used primarily to fund their respective tax liabilities.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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