Afterpay announces capital raising of $800m

Maria Nikolova

The capital raising includes a fully underwritten institutional placement to raise $650m, followed by a non-underwritten Share Purchase Plan that aims to raise approximately $150m.

Afterpay Ltd (ASX:APT) today announced a capital raising of approximately AUD 800 million that includes a fully underwritten institutional Placement to raise AUD 650 million, followed by a non-underwritten Share Purchase Plan that aims to raise approximately AUD 150 million.

Afterpay is raising additional capital to accelerate its investment in growing underlying sales, and prioritising global expansion in the short term to maximise shareholder value in the longer

term. This includes investing in existing regions to maintain and grow its position in each market and expand its customer offerings, as well as expediting its expansion into new markets.

The company also seeks to fortify its balance sheet to underpin funding of its rapid growth in underlying sales in excess of its FY22 mid-term targets; and to create the flexibility and capacity to execute on potential M&A opportunities that could present themselves in the short to medium term.

Afterpay is undertaking a fully underwritten institutional Placement (Placement) to raise AUD 650 million. Pricing will be determined via an institutional bookbuild, with an underwritten floor price of $61.75 per new share (New Share). The underwritten floor price represents a 9.2% discount to the closing price on 6 July 2020.

New Shares issued under the Placement will rank equally with Afterpay’s existing shares.

Afterpay’s shares will remain in a trading halt today while the placement is conducted. Normal trading in Afterpay shares is expected to resume on July 8, 2020 or such other time as the completion of the placement is announced to the market.

Concurrent with the placement, Afterpay co-founders, Anthony Eisen and Nicholas Molnar have each agreed to sell 2.05 million shares, representing 10% of their respective holdings in Afterpay. The co-founder sell-down represents approximately 1.5% of total shares outstanding in Afterpay.

The co-founder sell-down will be fully underwritten with pricing determined under the bookbuild for the institutional placement.

Mr. Eisen and Mr. Molnar are each expected to remain Afterpay’s largest shareholders (subject to allocation of New Shares under the Placement and the Co-founder Sell-down) with a relevant interest in approximately 18.4 million shares each. Mr. Eisen and Mr. Molnar remain committed to Afterpay and have each confirmed that they will not sell any further shares until after the company’s 2020 AGM.

A share purchase plan (SPP) will follow the placement with eligible Afterpay shareholders in Australia and New Zealand offered the opportunity to acquire additional shares in Afterpay. The SPP will not be underwritten.

Shareholders on the Afterpay register at 7:00pm (Sydney time) on 6 July 2020 (Record date), with a registered address in Australia or New Zealand will be entitled to subscribe for up to AU$20,000 worth of Afterpay shares through the SPP, subject to eligibility criteria and other terms and conditions of the SPP. Shares issued under the SPP will rank equally with existing shares of Afterpay.

The SPP aims to raise approximately $150 milllion. Afterpay may decide to scale-back applications under the SPP at its absolute discretion. New Shares under the SPP are to be issued at the lower of the price paid by investors under the Placement, and the 5-day VWAP of Afterpay shares up to the SPP closing date.

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