Digital financial services company, Zip Co Limited (ASX: ZIP) has undertaken a number of changes to its funding facilities and capital structure which collectively strengthen Zip’s balance sheet, provide additional funding diversification, extend duration and further simplify the Company’s capital structure to support ongoing profitable growth.
Key points:
- Corporate Facility: Zip has executed an agreement for a new $150 million corporate debt facility which will refinance its existing corporate debt of $90 million
- CVI Convertible Notes: Zip has concurrently undertaken an incentivised conversion and repayment of the $40 million outstanding CVI Convertible Notes to simplify the capital structure, reducing the outstanding face value and monies owing to zero
- Senior Convertible Notes: Zip has seen a continued deleveraging of its balance sheet with Zip’s Senior Convertible Notes outstanding face value reducing to $85 million (vs $110.1 million on 30 September 2023)
- US receivables funding: Zip has executed an agreement to refinance Zip’s US$225 million facility for three years to December 2026
- AU receivables funding: Zip has successfully refinanced Zip’s Series VFN No. 2 facility inthe Zip Master Trust, extending the facility to March 2025.
We are pleased to announce a suite of financing initiatives which further strengthen Zip’s balance sheet, provide financial flexibility and a strong platform for ongoing profitable growth,” CEO and Managing Director, Cynthia Scott, said.
“The new corporate facility will be used to refinance our existing corporate debt – providing the Group with corporate funding certainty for the next four years, and concurrently allow Zip to undertake an incentivised conversion and repayment of the CVI Convertible Notes.
“In addition, with the outstanding face value of the Senior Convertible Notes having now reduced to $85 million, we have seen a further strengthening of the balance sheet and simplification of Zip’s capital structure. The successful refinancing of our US and Australian receivables funding provides headroom for receivables growth and demonstrates support from new and existing investors.”
Corporate Facility
Zip has executed an agreement for $150 million to refinance its existing corporate debt with funds managed by Ares Management Corporation, a global alternative investment manager, providing corporate funding certainty, diversification and duration to the Company. Proceeds from the facility will be used to repay Zip’s existing corporate facility, fund the cash component of the incentivised conversion of the outstanding CVI Notes, and provide additional liquidity to support growth. The term of the facility will be four years, with the option at Zip’s discretion to refinance or repay the facility prior to maturity.
