LITTLETON, Colo. - CPI Card Group Inc . (NASDAQ:PMTS (TSX:PMTS)), a payments technology company, has initiated a private offering of senior secured notes amounting to $285 million, with the maturity date set for 2029. The completion of this offering is contingent upon market conditions, and there is no guarantee of its finalization or the terms if it does proceed.
The notes, which are to be issued by CPI Card Group's wholly-owned subsidiary CPI CG Inc., are intended to be general senior secured obligations. They will be guaranteed by CPI Card Group and its current and future wholly-owned domestic subsidiaries, excluding the issuer. The assets of both the issuer and the guarantors will act as security for these notes, with certain exceptions.
CPI Card Group aims to allocate the net proceeds from the sale of these notes, in conjunction with available cash, to redeem all of its outstanding 8.625% senior secured notes due in 2026. This will also cover the costs associated with fees, premiums, and related expenses.
The offering is directed exclusively toward qualified institutional buyers in line with Rule 144A under the Securities Act of 1933, or to certain non-U.S. persons in compliance with Regulation S under the same act. The securities have not been registered under the Securities Act or any state securities laws, and as such, they cannot be offered or sold within the United States without registration or an exemption from these requirements.
This press release does not represent an offer to sell or a solicitation to buy the notes and related guarantees. The offering of these notes and guarantees will only be conducted through a private offering memorandum and is not being proposed to any person in any jurisdiction where such an offer, sale, or solicitation would be unlawful.
The information provided in this article is based on a press release statement from CPI Card Group Inc .
In other recent news, CPI Card Group experienced a 7% decrease in net sales for the first quarter of 2024. Despite this, the company witnessed sequential growth in net sales, net income, and adjusted EBITDA, buoyed by significant expansion in the prepaid business and card services.
Roth/MKM maintained its Buy rating on CPI Card Group, expressing a positive outlook on the company's prospects after investor meetings with the firm's CEO and CFO. The firm anticipates an uptick in customer purchasing patterns once the current excess card inventory issue is resolved by 2024.
Furthermore, CPI Card Group is expanding into digital solutions, supported by a new contract promising increased sales through 2029. The company also has a robust cash reserve of $17.1 million and has made no borrowings against their $75 million ABL revolver, indicating financial stability.
These are recent developments that highlight CPI Card Group's strategic approach to overcoming the current sales decline and its commitment to long-term growth.
InvestingPro Insights
In light of CPI Card Group Inc.'s (NASDAQ:PMTS) recent announcement regarding the private offering of senior secured notes, a closer look at the company's financial health and market performance may offer investors additional context. According to InvestingPro data, CPI Card Group boasts a market capitalization of $288.07 million, underscoring its stature in the payments technology sector. The company's P/E ratio stands at 16.43, reflecting investor expectations about its earnings potential.
InvestingPro Tips highlight a few key aspects of CPI Card Group's financial situation that could be of interest to potential investors. Notably, CPI Card Group's valuation implies a strong free cash flow yield, which suggests that the company is generating sufficient cash flows relative to its share price. Moreover, CPI Card Group's liquid assets exceed its short-term obligations, providing a cushion for operational needs or unexpected expenses.
Performance-wise, CPI Card Group has experienced a significant price uptick over the last six months, with a 36.68% total return in that period, and an impressive 58.6% return over the last three months. This positive trajectory is a testament to the company's recent market performance and may instill confidence in investors considering the purchase of the newly offered notes.
For those seeking further insights, InvestingPro offers additional tips on CPI Card Group, including predictions on profitability and historical return analysis. Interested investors can explore these tips and more by visiting https://www.investing.com/pro/PMTS. Moreover, by using the coupon code PRONEWS24, users can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more valuable investment information.
With a total of 9 additional InvestingPro Tips available, investors have ample resources to make informed decisions regarding CPI Card Group's offerings and overall investment potential.
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