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Zip Co Ltd (ASX:ZIP) has seen its share price jump 3% in morning trading, reaching a new 52-week high of AU$2.29. This surge follows the company’s announcement that it has completed a successful capital raising initiative. The latest move marks a significant turnaround for the buy now, pay later (BNPL) company, as it continues to strengthen its balance sheet and optimise its capital position.
Just over a month ago, Zip took decisive steps to improve its financial health by outlining plans to eliminate AU$267 million of debt. In mid-May, the company simplified its capital structure by converting all outstanding Zip senior convertible notes into fully paid ordinary shares. This strategic move was aimed at streamlining the company’s financial framework.
The capital raising announcement comes after the completion of a fully underwritten placement of AAU$217 million. Today, Zip revealed it had raised approximately AAU$50 million through an oversubscribed share purchase plan (SPP) that closed on August 14, 2024. The SPP, which received strong support from investors, saw valid applications totaling around AU$85 million from 4,301 eligible shareholders. This level of participation reflects approximately 13% of eligible shareholders and 58.17% of eligible shareholdings, with the average application amount being around AAU$19,800.
The newly issued shares under the SPP are priced at AU$1.56 each. Shareholders who applied for AU$1,000 worth of new shares received 641 shares without any scale-back. However, those who applied for amounts exceeding AU$1,000 faced a pro-rata scale-back, with any excess application funds refunded.
The proceeds from the SPP will be used to further optimise Zip’s capital structure and provide greater flexibility for future growth. The capital raised is intended to enhance the company’s financial stability and support its strategic objectives moving forward.
