Payzone dives on profit warning

Payzone dives on profit warning

Shares in Irish e-payments outfit Payzone lost 60% of their value after the firm said it expects to make a pre-tax loss of EUR30 million for the year ending 30 September 2008.

Payzone stock fell 60.21%%, or 28.75 pence, to 19.00 pence after the vendor said its business had been impacted by "a challenging trading period and the integration of the Cardpoint and alphyra businesses".

Payzone has revised its pro-forma budgeted Ebitda for the financial year ending 30 September 2008 to EUR47 million. Revised pro-forma pre-tax losses are EUR30 million, whilst the firm's net debt is about EUR276 million.

Payzone stock had resumed trading on London's AIM market today after being suspended in January following a power struggle which saw former CEO John Nagle and CFO John Williamson go to court to prevent their dismissal. The men were later ousted from the board at an EGM.

In its trading update, the vendor says it is also planning to raise EUR40 million through the placing of 137.3 million shares at 20 pence each and 5.5 million new euro denominated shares at EUR1 a piece. Payzone says this move cleared the way for trading in its shares to resume on the AIM today.

Proceeds from the share placing will be used to fund "immediate working capital requirements and its medium term capital expenditure plans".

Mike Maloney, chief executive, Payzone, says: "This fundraising puts Payzone on a firm financial footing from which to take the business forward. Following a challenging few months operationally for the company, we are now in a position to invest significantly in the business, to implement a three-year growth plan and to capitalise on Payzone's strong market positions throughout Europe."

Payzone also says it is in discussions with its banking consortium to agree new covenant levels following the revised budget. The talks are "well progressed and constructive" and expected to be "concluded satisfactorily within the short term", says the firm.

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