Pushpay to raise $13.8m to fund US growth

Pushpay to raise $13.8m to fund US growth

Pushpay Holdings Limited (NZAX:PAY) (‘Pushpay’ or ‘the Company’) announces that it intends to undertake a pro-rata non-renounceable entitlement offer to raise a total of $13.8 million (before costs).

Under the entitlement offer, each eligible shareholder (being a shareholder with a registered address in New Zealand on the record date) will be entitled to apply for 1 new ordinary share in Pushpay for every 14 shares held by the eligible shareholder on the record date, at a subscription price of $3.85 per share.

Certain interests associated with the Huljich family and with the Bhatnagar family, which in aggregate hold 34.81% of the shares in Pushpay, have committed to take up their pro-rata entitlements under the entitlement offer. A number of investors, including interests associated with Pushpay Director Graham Shaw, have agreed to fully underwrite the balance of the entitlement offer at $3.85 per share.

The entitlement offer is non-renounceable. This means that there is no rights trading and that an eligible shareholder’s entitlement to participate in the entitlement offer cannot be sold or transferred.

Pushpay intends to utilise the proceeds from the entitlement offer to further develop its product offering and as working capital to accelerate growth in international markets, focusing on its key target territory – the United States of America (USA) – increasing sales via its direct sales, referrals program and strategic channel partnerships. The offer proceeds may also be used to repay any outstanding debt under the Christopher & Banks standby facility on the closing date of the offer. That facility will continue to remain in place and available to Pushpay until 30 June 2016 (unless extended).

The Company plans to release the Offer Document for the entitlement offer on 12 May 2015.
Indicative Timetable (which Pushpay reserves the right to change in compliance with law and the NZAX Listing Rules)
Record date for determining entitlements under the entitlement offer 5:00 pm 5 May 2015
Expected despatch of the Offer Document and Entitlement and Acceptance Form 12 May 2015
Opening date of the entitlement offer 12 May 2015
Closing date of the entitlement offer (last day for receipt of the completed Entitlement and Acceptance Form with payment) 5:00 pm 28 May 2015
Expected date for allotment and issue of new shares under the entitlement offer 5 June 2015
Expected date for quotation of new shares 5 June 2015

Bruce Gordon, Pushpay’s Chairman said, “Pushpay expects its customer base to grow by over 100% to more than 2,000 merchants in the six months to 30 September 2015. Successful growth requires funding to support it, particularly in a Software as a Service (SaaS) company such as Pushpay. We believe that it is preferable to focus on and invest in growth as the best means to enhance overall value in the business.”

“We are committed to delivering best-in-class SaaS metrics as the Company continues to execute on its strategic plan driven through a keen focus from management and the teams coordinated across our USA and New Zealand operations”, said Chris Heaslip, Pushpay’s Chief Executive Officer.

The Company plans to provide a quarterly operational update in the week beginning 6 July 2015. In advance of that, in connection with the entitlement offer, Pushpay wishes to update the market on certain material matters, as set out below.2

Future Funding Opportunity

The capital raised from the entitlement offer is expected to support Pushpay’s growth strategy for over 12 months. The Board believes it prudent to prepare for future funding requirements and as such is in discussions with a number of US-based venture capital firms who the board believes have the potential to add significant value to the Pushpay opportunity. The Board currently expects that this additional funding will not exceed $10 million and is likely to be raised within the next six months.

Callaghan Innovation R&D Project Grant

Pushpay is pleased to announce that it has been approved for an R&D Project Grant from Callaghan Innovation subject to agreement of terms and conditions.

R&D Project Grants support firms with smaller R&D programmes and those that are new to R&D. They typically provide support of 30-50% of eligible R&D costs. The grant allows for the co-funding by Callaghan Innovation of 40% of approved R&D spending by Pushpay, with a total possible allocation of $960,000 (representing 40% of $2.4 million) over an 18 month period.

Chris Heaslip said, “We are very pleased to receive continued support from Callaghan Innovation. This funding, once awarded, will provide additional resources to deliver scale and growth in the Pushpay platform through the development of new features, functionality for new markets, and scalable engineering processes and platforms. Pushpay will continue to drive innovation and focus on features that offer simpler, faster and more intuitive ways to make secure payments.”

NZX Main Board Migration

Pushpay has applied to NZX for permission to cease quotation of all of its shares on the NZAX and to contemporaneously commence quotation of those shares on the NZX Main Board. This is at NZX’s sole discretion and is subject to Pushpay satisfying any pre-conditions set by NZX for an NZX Main Board listing.

Bruce Gordon said, “We believe the move to the NZX Main Board, if approved by NZX, is in the best interest of shareholders and is likely to lead to increased investor awareness and improved liquidity.”

Information Memorandum

Attached to this announcement is an Information Memorandum, which was prepared by Pushpay to seek underwriting commitments from wholesale investors in connection with the entitlement offer. The Information Memorandum was prepared as at 19 March 2015, and has not been updated since then.

ENDS

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