(Nov 6): Worldline SA’s stock hit a fresh low as a planned share sale worth €500 million failed to convince investors that the embattled payments firm can be turned around.
The transaction will “back the execution” of Worldline’s turnaround strategy, which it presented simultaneously, the firm said in a statement on Thursday, confirming an earlier Bloomberg News report. It will consist of a capital increase of about €110 million at a price of €2.75 per share, and a subsequent rights issue of about €390 million.
Worldline’s shares fell as much as much as 12.3% after initially opening higher, hitting the lowest level ever at €1.80 a piece. That gave the firm a market value of about €510 million.
The French company has been struggling to win back investor confidence after allegations were made in several investigative newspaper reports earlier this year that it had turned a blind eye to fraud. The reports claimed that the firm continued to do business with high-risk customers in recent years, effectively enabling some fraudulent transactions to continue.
The share sale will strengthen “Worldline’s financial structure at this pivotal moment,” Chief executive officer Pierre-Antoine Vacheron said in the release on Thursday.
French lenders Bpifrance, Credit Agricole SA and BNP Paribas SA are among existing shareholders that will buy fresh shares, Worldline said in the statement. That will result in stakes of 9.6% for Bpifrance, 9.5% for Credit Agricole and 7.9% for BNP Paribas.
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The combined stakes would give the three French banks close to 30% in the payments firm.
Worldline has “critical infrastructure in payment services,” BNP Paribas chief operating officer Thierry Laborde said in the release to explain the reasons behind the investment.
The stock exchange operator SIX Group AG, which Worldline’s website lists as its biggest shareholder, won’t be participating in the capital increase, the Swiss firm said in a separate statement on Thursday. SIX also disclosed that its full-year results will include a hit of about 550 million Swiss francs linked to its existing stake in the French company.
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The announcement from Worldline on Thursday was part of an investor day. As part of that, the firm vowed to “simplify” its operating model and achieve annual cost savings of about €210 million.
Worldline has been speaking to banks in recent weeks about ways to raise capital that could include a possible share sale, Bloomberg News reported on Wednesday. The firm has been considering raising several hundred million euros, people familiar with the matter said.
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