Earthport bids to raise £875,000 in working capital
26 January 2010 | 5061 views | 0
UK payments group Earthport is looking to raise £875,000 in working capital through a placing of seven million shares at 12.5 pence each in a last-ditch bid to keep the firm afloat while it chases down an outstanding £3.25 million franchise payment from Zink Financial.
News of the placing cheered City investors, who marked up the company's shares by 10% to 15 pence at the start of trading.
Earthport's stock had come crashing down in December after it emerged that a £3.25 million downpayment on a franchise deal with Zink Financial to operate the company's money transfer system in Latin America and the Caribbean had failed to materialise.
Last week Earthport chief executive James Bergman quit the firm and the company issued a statement saying that it had been engaged in a "constructive dialogue" with the principal of Zink regarding receipt of the payment due on 21 December 2009.
In announcing the placement, the firm says that it "remains in constructive discussions with Zink, and the directors continue to be confident that the franchise fee will be received".
Update The placing was fully subscribed by mid-afternoon. Three Earthport executives participated in the placing, including chairman Mike Harrison who picked up 1.2 million shares, finance director Zafar Karim with 0.4 million shares and executive director Peter Chappell who signed up for 0.28 million shares.