Credit Clear shareholders have voted in support of a capital raising to support the company’s proposed acquisition of debt recovery company ARMA Group Holdings.
In December, the receivables management company announced that it had entered into a binding agreement to acquire ARMA for A$46 million – 60 per cent cash and 40 per cent scrip – plus an earnout.
It has completed an institutional placement, raising $12.7 million, and launched a $4 million share purchase plan. On Friday, shareholders approved a further $12.8 million institutional tranche.
Credit Clear was launched in 2015 and was listed on the ASX in October 2020. It offers what it calls a “full-service suite of receivables services, allowing clients to manage communications and payment arrangements with their customers through a digital and mobile interface.”
Its pitch is that it helps clients with better customer engagement and insight, faster payment reconciliations, improved cash flows and lower collection costs.
It also offers debt recovery services. It has already made an acquisition in that segment, buying a company called Credit Solutions in 2019.
Credit Clear chair Gerd Schenkel said at the meeting: “The ARMA acquisition follows a well-proven recipe for us. Like ARMA, Credit Solutions is a well-established contingent debt collection provider and under Credit Clear’s ownership we have been successful in cross and up-selling our digital debt collection services to their customer base.
“I should stress that it is our strategy not to purchase debt ledgers. We provide a service to billers to collect their outstandings.”
ARMA has more than 400 active clients. It reported revenue of $15.5 million and EBITDA of $6.4 million in 2020/21.
Credit Clear made a loss of $7.8 million on revenue of $10.9 million in 2020/21. Cash outflow was $3.9 million.
Total assets at June 30 were $22.3 million and cash and cash equivalents stood at $10.7 million.