SmartPay seeks to raise $6 million

Monday 28th March 2011

Eftpos terminal provider SmartPay is seeking to sell $6 million of redeemable preference shares which pay a fixed dividend of 10% per annum.

The goal is to reduce interest costs of 16% to 17.95% per annum for existing corporate debt.

The shares are similar to debt instruments in that they pay a fixed amount each year and the company obtained a ruling from NZ Regulation that says they are debt securities.

SmartPay managing director Ian Bailey said the company's interest costs had been high due to difficulties in obtaining suitable funding but this was expected to change during the next 12 months.

Mainstream banks were starting to show an interest in SmartPay's performance, he said.

In the 2010 financial year interest costs were $2.4 million and this would rise to over $3 million for the year ending March 31, 2011.

"If the offer is fully subscribed, and combined with the lower cost funding lines for our rental book, we could expect our interest costs to reduce by between $700,000 and $1 million in the coming 2011 year when compared to the existing facilities," Bailey said.

The company took on debt when it purchased assets from the receivers of Provenco Cadmus in 2009.

SmartPay has appointed FE Securities to be the arranger for the sale.

NZPA

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