SYDNEY: Australian pawnbroking and personal lender Cash Converters International Ltd said on Monday it is raising roughly A$25 million ($16.6 million) in an equity offering to help fund the proposed acquisition of a network of 29 franchise stores in the country.
The company, listed on the Australian Securities Exchange (ASX: CCV), will conduct the raising via a fully underwritten A$5 million placement to institutional investors and a partially underwritten A$20 million accelerated non-renounceable entitlement offer, it said in a statement.
The offer price has been set at A$0.305 per new share, representing an 11.5% discount to the theoretical ex-rights price and a 12.9% discount to the last closing price on Oct. 24.
The company’s largest shareholder, EZCORP Inc, which holds a 43.87% stake, has committed to subscribing for its full entitlement of approximately A$8.73 million. It will also sub-underwrite up to A$2.18 million of the retail entitlement offer, taking its total potential commitment to nearly A$10.91 million.
The proceeds will be used primarily to fund the previously announced A$37 million acquisition of the 29-store franchise network, known as the Cash Converters Investment Group. The stores are located in Queensland, New South Wales, the Australian Capital Territory, and Tasmania.
The acquisition is being undertaken at a blended earnings multiple of 4.5 times the group’s actual fiscal 2025 EBITDA and is forecast to be earnings per share accretive in the first full year of ownership, the company said.
“This opportunity makes the mix of equity and cash compelling in order for us to continue executing on our stated strategy, of growing the corporate store network and segment earnings,” said Sam Budiselik, Cash Converters CEO and Managing Director.
Upon completion, the acquisition will expand Cash Converters’ Australian corporate store network from 92 to 121 stores, significantly consolidating its presence on the country’s east coast.
The institutional entitlement offer and placement will close on Tuesday, with trading expected to resume on Wednesday. The retail entitlement offer is scheduled to open on Nov. 3 and close on Nov. 17.
Bell Potter Securities Limited is acting as the sole lead manager and underwriter for the equity raising.
($1 = 1.5072 Australian dollars)