ASX-listed BNPL Openpay handed to receivers just a week after ‘record’ results after failing to secure working capital

On Feb 6, 2023

ASX-listed Buy-now-pay-later (BNPL) fintech Openpay has been placed in the hands of receivers after it failed to bank working capital from its key funder.

The payments platform has been shut down, effectively sealing the company’s fate.

The collapse comes a week after the company’s quarterly results on January 31, which flagged delays in receiving the capital from AH Meydan Pty Ltd.

McGrathNicol partners Barry Kogan, Jonathan Henry and Rob Smith receivers and managers) of Openpay Group Ltd (ASX: OPY) (Company) and Openpay Pty Ltd on Saturday, February 4, after the company requested a trading holt for its shares last Wednesday. Separately, they were also appointed receivers of Openpay SPV Pty Ltd, and certain assets of Openpay Pty Ltd by Amal Security Services on February 3.

Openpay director Yaniv Meydan resigned from the board on Saturday.

In a statement following their appointment as receivers, McGrathNicol said customers will no longer be able to use the Openpay platform for new purchases, but are still required to pay any outstanding balances as part of their exisiting contract.

“The Receivers and Managers will work closely with Openpay’s employees, merchants and customers to urgently determine the appropriate strategy for the business,” McGrathNicol said

Openpay listed on the ASX in December 2019 at $1.60 per share, raising $50 million for a market capitalisation of $150 million. It went on to raise another $33 million in June 2020 in an institutional share placement.

From a peak of $4.70 in August 2020, Openpay’s share price fell below $0.50 cents 12 months ago was languishing at $0.20 cents when a trading was suspended last week

This time last year it had expanded into the US and in releasing its December quarter results last Tuesday, painted a positive picture before its sudden implosion.

Second quarter FY2023 saw total transaction volume (TTV) up 45% on 12 months earlier to $126 million. Quarterly revenue grew by $59 to $10.1 million. Active Plans rose 40% to 2.1 million and active customers rose 15% t0 347,000.

“We are pleased to announce that Q2 has set new records across TTV, Revenue and other key leading indicators,” CEO Dion Appel said.

“This is a result of the enduring consumer demand for our differentiated offering of longer, larger payment plans. Our improved revenue margins show that consumers and merchants are willing to pay for that extra value as the cost of living increases.”

But amid the “record” headlines, the operating cash flow revealed ongoing burn, sitting -$18.2 million in the red for the quarter and -$37.87 million for the first half of FY23. Openpay ended the calendar year with $17 million in cash and cash equivalents. Of $152 million in financing facilities, Openpay had $41 million left to call on. Of $42.5 million in working capital facilities there was just $7.5 million left at December 31.

The company doubled its receivables funding from $55m to $110m last November through existing financier GCI Commercial Finance Fund and Fortress Investment Grou, saying at the time that it “remains on plan to deliver cash EBITDA profitability by June 2023 (on a monthly basis), and beyond”. Some $85 million of that facility had been used.

On Friday, after the funds from AH Meydan failed to materialise, the company sought an extension of its trading halt saying: “The non-payment of the utilisation notice, which fell due on 31 January 2023, has placed the Company in breach of covenants in loan agreements with the company’s senior secured lenders.”

When Openpay’s collapse leaves merchants is unknown. The business had deals with the likes of Officeworks, Kogan, Nissan and Ford Australia, targeting higher value purchases compared to rivals such as Zip and Afterpay. It focused on the automotive, healthcare, retail, home improvement and education sectors offering B2C repayment plans over 2–24 months on transactions up to $20,000. Its B2B platform, OpyPro, was a SaaS solution for merchants to manage their trade accounts.

Openpay’s collapse follows New Zealand BNPL Laybuy saying last week that it would delist from the ASX.

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