Zip (ASX:Z1P) share price sinks lower after $400m notes offering

The Zip Co Ltd (ASX:Z1P) share price is under pressure and sinking lower after raising $400 million to support its growth plans…

| More on:
Rolled up notes of Australia dollars from $5 to $100 notes

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Zip Co Ltd (ASX: Z1P) share price has returned from its trading halt and is sinking lower.

At the time of writing, the buy now pay later (BNPL) provider's shares are down 4% to $9.23.

Despite this, the Zip share price is still up 65% since the start of the year.

Why was the Zip share price in a trading halt?

Zip requested a trading halt on Wednesday so that it could undertake a A$400 million senior unsecured convertible notes offering. These notes are convertible into fully paid ordinary shares of Zip and are due in 2028.

Zip's Co-Founder and COO, Peter Gray, commented: "We are very excited to welcome a new group of global investors to the Zip ecosystem, embracing our journey and mission to be the first payment choice everywhere and every day."

Mr Gray revealed that the funds will be used to support its international growth.

"The additional capital from this Offering will support the active pursuit of both core and international growth opportunities, as Zip becomes a truly global BNPL player, leveraging our very strong momentum and the worldwide shift away from the broken credit card, towards a better, fairer digital alternative," he added.

Money in the bank

This morning Zip announced that it has successfully priced its $400 million zero coupon senior unsecured convertible notes.

It advised that the notes will mature on 23 April 2028 unless otherwise redeemed, repurchased, or converted in accordance with their terms and conditions.

According to the release, the notes are convertible into fully paid ordinary shares of Zip at an initial conversion price of $12.39 per share. This represents a conversion premium of 29% over the Zip share price prior to its halt.

Mr Gray said: "We are very pleased with the strong global demand for this Offering. This transaction further diversifies Zip's sources of capital and allows us to pursue our global growth aspirations while reducing potential dilution of existing shareholders. Another fantastic outcome for Zip and its shareholders."

Co-Founders sell shares

Zip also advised that its Co-Founders Larry Diamond and Peter Gray have sold a small portion of their holdings. They sold a total of 2 million shares in aggregate for $9.18 per share.

The proceeds from the sale will be used primarily to fund their respective tax liabilities.

Should you invest $1,000 in Bhp Group right now?

Before you buy Bhp Group shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Bhp Group wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

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 ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on BNPL shares

Frustrated and shocked business woman reading bad news online from phone.
BNPL shares

Why is the Zip share price dropping today?

Let's see how this buy now pay later provider performed in April.

Read more »

A young woman smiles as she rides a zip line high above the trees.
BNPL shares

How Zip shares rebounded 45% from their 7 April lows to beat the ASX 200

Did you catch what happened with Zip shares in April?

Read more »

A young woman in a shop hands her credit card to the cashier.
BNPL shares

Up 41% in 3 weeks, should I buy Zip shares today?

Zip shares have been on a tear in April. Now what?

Read more »

A young woman smiles as she rides a zip line high above the trees.
BNPL shares

Zip share price rockets 15% on record cash earnings!

It’s a great day to own Zip shares today. Here’s why.

Read more »

A young woman in a shop hands her credit card to the cashier.
Share Gainers

Zip share price rockets 20% on $50 million buyback news

Zip shares are surging ahead of the company’s planned $50 million buyback.

Read more »

BNPL written on a smartphone.
BNPL shares

Down almost 40% this year, can Zip shares turn around?

Is it time to buy now or wait until later?

Read more »

A man looking at his laptop and thinking.
BNPL shares

Buy, hold, or sell: What's the verdict on Zip shares?

Time to buy the dip on Zip, or time to close the case for good?

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Earnings Results

Zip share price jumps 11% on record half year result

This buy now pay later provider has delivered another impressive result.

Read more »