Payzone refinancing deal could see private equity firm take stake

PAYZONE IS close to a refinancing deal that will see a private equity firm take a stake in the business alongside a group of the company’s bankers.

Management is also likely to take a holding, while existing shareholders will see the value of their positions wiped out.

In an announcement to the London Stock Exchange yesterday, the firm said a private equity firm was “considering” investing in the company.

This investment would be made, Payzone said, on the basis that the e-payments group’s bankers would write off a large portion of its debts in return for a minority investment in the company.

The deal will, in effect, see Payzone being acquired by a newly-established company backed by the unnamed private equity firm and the company’s existing bankers.

These bankers include AIB, Bank of Scotland, Royal Bank of Scotland and Abbey National.

“While discussions are still ongoing, it is likely that any new capital structure for the business will result in no value for existing shareholders,” Payzone said in the statement.

The firm’s board “noted” the continued support of its finance providers, and said it remained confident that an “appropriate long-term capital structure” for the business would be found.

Payzone’s shares were suspended at the company’s request pending a further announcement.

The Aim-listed group warned its shareholders last November that the value of their holdings was likely to be destroyed as part of a refinancing deal being negotiated.

The company has struggled for some time under a debt burden of about €290 million, and its market value has tumbled to less than £2 million.

Payzone emerged from the 2007 merger of Irish e-payments group Alphyra and UK ATM operator Cardpoint.

Its shares initially listed at 76p in 2007, giving it a £200 million-plus valuation, but had declined to 0.4p before yesterday’s suspension, pushed downward by poor trading, internal disagreements and divestments.

Payzone’s largest shareholder is Balderton Capital, the venture capital group led by Barry Maloney, which owns 54 per cent. Former chief executive John Nagle, who was sacked in 2008, is the second biggest investor. Payzone is led by Mr Maloney’s brother Mike Maloney.

Over the past year the firm’s management has attempted to streamline the business by selling off international assets and cutting costs.

A number of staff have been made redundant as part of the restructuring process.