A bout of on-market buying of Beforepay shares by three directors of the company in the last week has done little to inspire investor support for the struggling payday lending business.
Details of share purchases made on 2 March were disclosed to the ASX on Wednesday by chairman Brian Hartzer and two other non-executive directors, Daniel Moss and Stefan Urosevic.
Hartzer has more than doubled his holding of ordinary shares in the company after he acquired 40,000 additional shares at an average price of A$1.22. He now holds 67,281 shares.
Moss and Urosevic each boosted their holdings of ordinary shares by 20,000.
Entities associated with Moss and Urosevic now hold more than 517,000 shares in the company.
However, the directors’ on-market purchases had no impact on investor sentiment towards the company on Wednesday.
Beforepay scrip closed down 3 cents or 3 per cent to 95 cents – a massive discount to the $3.41 paid by investors who bought into the initial public offering completed in January.
Beforepay had net liabilities of around $32 million, according to its balance sheet at the end of December, but several events have transformed the financial health of the company since then.
While Beforepay’s bottom line performance in the six months to the end of December indicate that the business was continuing to struggle, the recent IPO, which raised net proceeds of $30 million has reset the balance sheet to a favourable position.
When the company began trading on the ASX in the middle of January, it also triggered the conversion of more than $50 million of convertible notes to equity in the company.
The combined effect of the proceeds from the IPO and the debt conversion is that it left the company with net assets of almost $42 million on 17 January.
At its half year results in February the company also said it had $37.6 million of cash at hand following the IPO.
This means the company is under less immediate pressure than other listed fintech stocks to raise additional capital.
The depressed share price also means that most of Beforepay’s directors are out of the money on their options entitlements.
Directors are sitting on a mountain of share options, most of which are exercisable before the end of June 2024 at $1.30.
Moss and Urosevic are currently out of the money on their respective holdings of 799,000 options.
Hartzer, however, holds 242,200 options expiring in 2031 that are exercisable at the discounted price of only 88 cents.