Cash Converters bulks up

Pawn shop franchisor and payday lender Cash Converters announced yesterday that it had entered into a subscription agreement with a US company EZCORP to raise $54 million through a share placement.

The 108 million shares to be issued to EZCORP, a short term lender and operator of almost 900 pawn shops in the US and Mexico, will represent 30 per cent of the fully diluted capital of the company.

In a statement Cash Converters said it would use the funds to buy franchised stores and expand its loan book.

For the December half Cash Converters reported that revenue was up 23 per cent to $44.5 million. Two-thirds of revenue comes from franchise fees and the balance from the lending business.

Net profit for the half was up nine per cent to $7.9 million.

In its half year financial report the company said it was pursuing a strategy of selectively buying franchised stores as a way of diversifying its income.

It said: "There are other benefits that are achieved with the growth in the number of company owned stores. Cash Converters will have greater control of its already well established brand, not only in terms of store presentation, but also the intrinsic values such as customer service, pricing and policy, and the opportunity to better develop new products and services in-house."