Why the Pushpay share price is in a trading halt

The Pushpay Holdings Ltd (ASX:PPH) share price is in a trading halt whilst it undertakes a major sell down of shares by its co-founder and former CEO…

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The Pushpay Holdings Ltd (ASX: PPH) share price won't be going anywhere today after the payments company requested a trading halt this morning.

Why is the Pushpay share price in a trading halt?

Pushpay requested the trading halt whilst it undertakes a fully underwritten bookbuild to facilitate a partial sell down of shares held by Chris Heaslip.

Mr Heaslip is the company's co-founder and non-executive director. He resigned from his position as chief executive officer in May.

The release explains that the partial sell down will involve a bookbuild to allow the sale of 12.24 million fully paid ordinary shares in Pushpay (the equivalent of 4.45% of the company's issued capital), representing 41.2% of the ordinary shares held by interests associated with Chris Heaslip.

The underwritten floor price is NZ$3.70 per share, which represents a 3.6% discount to the 5-day VWAP and a 2.4% discount to last traded price.

No reason has been given for the sale, but the company believes the sell down will provide further free float and liquidity to support Pushpay's index weightings.

Pushpay has explained that the remaining interests associated with Chris Heaslip have entered into an escrow deed, under which they are restricted from selling, or otherwise disposing of their remaining holding for an 18-month period from the date of settlement of this transaction.

Guidance reiterated.

As well as announcing the sell down, the company provided an update on its expectations for FY 2020.

According to the release, its guidance for the year ahead remains unchanged. Management expects annual operating revenue of between US$122.5 million and US$125.5 million, a gross margin of over 63%, EBITDAF of between US$18.5 million and US$20.5 million, and Total Processing Volume of between US$4.8 billion and US$5 billion.

Pushpay isn't the only tech company which has seen a founder or co-founder sell shares recently.

The founders of both Afterpay Touch Group Ltd (ASX: APT) and Xero Limited (ASX: XRO) have been selling shares on-market in recent months.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. The Motley Fool Australia has recommended PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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