Payments services company Paysafe Group plc (LON:PAYS) today announced that it intends to commence an inaugural share buyback programme of up to £100 million.
The Paysafe buyback comes to counteract a large drop in Paysafe’s share price, following a negative report issued by short seller Spotlight Research on the company’s connection to illegal gaming out of China in conjunction with Paysafe client bet365.
The management of Paysafe, together with the Company’s Board, believe the current share price significantly undervalues the performance of the business to date and our future prospects.
Paysafe has a proven track record of significant cash conversion, which has been used to rapidly reduce the Company’s leverage since the announcement of the acquisition of Skrill and the associated debt fundraise in March 2015. The Company’s robust balance sheet and cash generation now provide the opportunity to take advantage of prevailing market conditions to repurchase shares at highly economic levels and as a result provide immediate EPS enhancement.
The maximum number of shares that the Company will be able to purchase under the Programme will be 48,110,871 ordinary shares in the capital of the Company, under the authority granted to the Company by ordinary shareholders at the Company’s most recent Annual General Meeting, held on 25 May 2016. The Programme will be undertaken using a phased approach and have a duration of 12 calendar months, subject to the buyback approval resolution being approved at the Company’s next Annual General Meeting in respect of any purchases to be made after the date of that meeting. The purpose of the Programme is to reduce the capital of the Company; repurchased shares will be cancelled.
In order to effect the first phase of the Programme, Paysafe has entered into an agreement with BMO Capital Markets Limited to carry out on-market purchases of its ordinary shares. This agreement includes provisions giving BMO Capital Markets Limited authority to carry out market purchases under the Programme independently.
Paysafe President and Chief Executive Officer Joel Leonoff commented:
I am pleased to announce Paysafe’s inaugural share buyback programme, which underlines our confidence in the business and its future prospects. The programme, and our track record of significant cash conversion, enable us to capitalise on current market opportunities without compromising our pursuit of bold M&A with a strong strategic fit.