The Splitit Ltd (ASX: SPT) share price could be a big mover today after the buy now, pay later company announced some new financing.
Splitit offers consumers the ability to split the purchase price of basic products (e.g. lemons, toilet paper or both). Shoppers can split their purchases into up to 36 interest-free monthly payments using their existing Visa or Mastercard.
How Will Splitit’s Share Price React To New Financing?
Splitit has announced that it has signed an agreement with Shaked Partners Fund (an Israeli business) to provide Splitit with an ‘interim finance facility’ to help Splitit continue to grow.
The new facility is for up to US$8 million and it can be flexibly drawn down in three parts over the next 11 months with each draw down maturing two years later. Splitit can use the facility for anywhere that it operates, which supports its global growth plans.
Splitit will use the facility at its discretion to provide funding alternatives for certain approved merchants, where the merchant will receive an upfront payment of the full purchase price in exchange for the purchase of a merchant’s receivables by Splitit.
The facility will incur interest at 9.5% per year on the amounts drawn by Splitit. There is also a 1.5% per year non-utilisation fee payable in certain circumstances.
The buy now, pay later company disclosed that the facility is secured by a first ranking charge over the shares in Splitit Capital UK and a bank guarantee for a small portion of the total facility limit.
Shaked Partners will also receive 2 million options in Splitit with an exercise price of $0.501 per option, which is the average closing price over the past 10 business days. The options expire in September 2024.
Splitit CEO Gil Don said: “This new finance facility is flexible and global. It can be utilised by Splitit to help us serve merchants all over the world”.
This is good news for Splitit to help its growth plans, but I don’t know what an appropriate price to pay for Splitit is (and whether that price is available on the stock market). That’s why I’d rather invest in the growth shares in the free report below instead.
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