STL raises cash to complete revenue-boosting deal
StarGroup Limited (ASX:STL) will move ahead with its acquisition of CashMyATM after raising more than $5.8 million to fund the deal.
It announced this morning that it had raised the cash from an entitlement offer and private placement, allowing it to move ahead with the deal.
Overall the entitlement offer closed 97.4% subscribed – something which STL CEO Todd Zani said was a great result given the jitters in the market right now.
“The company was pleased with the strong support and take up of shares from existing shareholders, particularly given the Brexit and its impact on our local markets.”
A $3 million private placement was followed up by a 1-for-6 rights issue which raised $2.84 million.
The CashMyATM acquisition
STL announced its proposed acquisition of the ATM group, which has 97 machines – and should the acquisition go through STL will have a network of 365 machines.
It previously said the acquisition would have the effect of boosting annual revenue in FY17 from a projected $9.3 million to $11.4 million.
Investors should note that these are projections only, and there is no guarantee of it panning out exactly like this.
STL is slated to pay $4.54 million as compensation for the deal – which is structured in cash and shares.
CashMyATM’s network of 97 machines process a total of 800,000 transactions per year – and combined with STL’s current network transactions should reach 2.9 million.
On completion of the acquisition, Jason Warren, CEO of CashmyATM, has agreed to join Stargroup as its national business development manager.
About StarGroup Limited (ASX:STL)
Back in September 2015 STL merged with iCash Payment Systems to create a combined ATM and EFTPOS company, competing with globally prominent names such as DCI Payments, based in Canada.
STL’s business model centres on its network of 230 ATMs dotted around Australia where the company collects fees from each transaction. However, STL wants to extend its reach and influence in the small payments niche by offering EFTPOS services to retailers.
The frequency of EFTPOS transactions to pay for small ticket items, including new features such as PayWave, are growing strongly in Australia on the back of a gradual move into a cashless society that relies less on physical notes and coins.
STL hopes its EPTPOS unit will add another source of revenue for the company once fully rolled out and implemented.
A key advantage STL has over many of its competitors is that it is the only listed ATM company which has a direct stake in the manufacturer of its ATM machines, namely NeoICP in South Korea.
When the experts at Next Investors have a stock pick, it may pay to listen.
The Next Investors have been investing in ASX small cap stocks for years, with their best small cap picks yielding returns of 1,200%, 1,120%, 900% and 678%.
They have just revealed their hand-picked, FY2021 stock portfolio of high conviction long-term investments.
Click the link below to see what they are currently investing in.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.