EML Payments Limited

ASX:EML

EML Payments Limited

ASX:EML
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$0.880 (-1.7%)
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#128
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Reports (20) My Report Forum Investors
Forum Topics EML EML Final Nails in PFS Group Acqui

Pinned straw:
jcmleng
Added 3 months ago

EML announces that it has entered into an agreement to settle all outstanding deferred acquisition payments (“Loan Notes”) from the acquisition of Prepaid Financial Services Group (“PFS Group”) in 2020 for £15.0m (A$28.8m)

  • This represents a £7.9m (A$15.2m) or ~35% reduction to the total value of the Loan Note liability if paid at face value plus interest by the specified instalment dates
  • All historical earnout arrangements are confirmed at zero
  • This agreement represents the conclusion of all outstanding actual and potential liabilities for EML and its shareholders flowing from the 2020 PFS Group acquisition structure. 
  • Settlement of the Loan Notes concludes all outstanding matters between EML and the PFS vendors including but not limited to acquisition earnout arrangements for which nil will be paid
  • The settlement amount will be paid by 31 July 2024 and funded from EML’s cash balance.
  • Settlement of all outstanding actual or potential liabilities from EML’s PFS Group acquisition structure is another important milestone in the delivery of the EML Group’s strategic review. By reducing the Loan Note liability and negating all other potential liabilities arising from the PFS Group acquisition structure, inclusive of potential earnout disputes, EML will strengthen its balance sheet and further de-risk the business. 


This feels like the final nails in the PFS Group coffin, thank goodness! 

Another piece of positive news, amidst a series of positive developments in recent months, relating to both the winding up of PCSIL and the disposal of Sentenial.

I viewed the recent exit of the Alta Fox Director and the appointment of Kevin Murphy to the Board as also being another positive sign that the turnaround has reached a definitive milestone.

Topped up IRL today given the recent price pullback and on the back of this news.

Discl: Held IRL and in SM. 
AUROPAL
3 months ago

Interesting how the market reacted to the news. Maybe it was thought that they'd be able to get out of the cost entirely or at least get a better deal than has been agreed? Or maybe it's just a case of "buy the rumour, sell the news".

9
UlladullaDave
3 months ago

I think the market is still digesting the likely change from EML being sold imminently, to the core remaining a listed business with all the troubled bits removed.

That was why I sold, IRL and on SM.


11
UlladullaDave
3 months ago

Alta Fox has sold its entire stake. So it seems that any deal to sell the whole business is now off the table for some time.

A panicked rush for the exits might provide an interesting point of entry if you have a multi-year time frame.

15
jcmleng
3 months ago

If I recall, Alta Fox built its EML stake around 50-60c, so they would have made their money selling out at ~$1+. Not a bad return for 1+ year's work with 1 Director on the Board! This explains the fall to around $1 in the last 2 or so weeks.

With Alta Fox out, PSCIL cremated and Sentennial sold, EML is now back to where it was prior to these events, ie. when the market was bullish as hell at its growth propects. EML is that much wiser on acquisitions, has a clear strategy around growing the core business, a clear focus on cutting expenses and a big tail wind of high interests that look like staying high for some time.

8% + of the register would have $1 as their cost price, plus the others still hanging on for dear life from a much higher entry point.

I thus didn't see a wholesale of EML coming at all as I didnt see a compelling reason to do so. They are cash generating, profitable and growing. Alta Fox's exit reduces the risks of a sale.

If the market was bullish about EML's prospects back then, then it should start to be bullish again now once it has recognised that the old dog in the doghouse has decisively cleaned itself of crap it threw at itself.

Just re-read Ian Cassel's article on Turnarounds (which I like very much). I think EML fits his "exhilarating turnaround" criteria perfectly and is in step 4 of his 7 step criteria:

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Discl: Held IRL and SM, looking to top up again.

16
UlladullaDave
3 months ago

You think EML is worth ~$8 is the next couple of years? That's quite a call @jcmleng


11
jcmleng
3 months ago

@UlladullaDave, nah, $8 is what the fairies are saying. I love the stuff they are smoking - they need to share it ... !

Have averaged down to just a tad under $2 now, which, according to our man Cassel, could be done and dusted in a quarter ... EML should beat guidance this FY, so I'm hoping they will make some progress towards $2.

Discl: Just topped up

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