Laybuy considers UK exit as it hunts new capital

Laybuy will look to exit or restructure its UK business if it can’t raise capital through other means.

The buy now, pay later operator was founded by Kiwi retail magnate Gary Rohloff and has its head office on Auckland’s North Shore. It was listed on the ASX with an initial offer price of A$1.41 in September 2020.

But its shares have fallen since and closed on just 3.7c on Thursday amid a wider write-down in value of the sector.

In audited financial accounts released to the ASX late yesterday the company revealed it made an after tax loss of $51.58 million for the year to March 31 and as of that date had nets assets worth $26m.

The group had net cash outflows of $52m from its operating activities during the year.

The notes to the accounts show the business needs to secure additional capital before July 31 with funding to flow before September 30 to continue with its growth aspirations.

Last month the company said it would cut costs and focus on profitability.

The accounts reveal plans for a review of its operational spend including a “reduction” in the employee headcount.

In April the company appointed NOR Capital to undertake a strategic review to explore various strategic alternatives and capital raising options.

In a statement released to the ASX on Thursday, founder and managing director Rohloff said this work was progressing, and active discussions were under way with several parties which might result in a sale or partial sale of the business.

“If these processes are ultimately unsuccessful, the company will exit or restructure (through either a joint venture or sale) its UK operations and in the event of an exit decision, this is expected to be completed by 30 September 2022.”

Rohloff said he would update the market on or before July 31 on the progress of this.

The company has a $30m facility with Kiwibank of which $11m was drawn as of March 31 and a further £30m ($58.8m) facility with PFG of which £7m was drawn.

“Because we will either raise capital or exit or restructure our business in the UK, the directors expect that the group will be able to meet its undertakings and, with the continued support of the two debt funds, will have sufficient cash to discharge its liabilities as they fall due, for a period of at least one year from the date of the financial statements.”

But the company also warned that if it can’t deliver on a range of factors it will need additional capital, funding or amended terms with its funders to support the business.