Kathy Schick and Bill Feingold
Euronet Worldwide (EEFT) is a leading electronic payments provider. The company is involved in three business segments - electronic funds transfer (EFT) processing, epay, and money transfer.
Euronet Worldwide's business is doing well with revenue and EBITDA trending up. The company recently announced 3Q14 results. Revenue was $453.4mm up 26% year-over-year and adjusted EBITDA was $73.1mm up 36% from the prior year quarter. Adjusted cash EPS for 3Q14 were $0.83 up 43% year-over-year. EEFT operates in three business segments: EFT processing (19,808 ATMs), epay, and money transfer. All three segments experienced growth in revenue and EBITDA for the quarter.
The new convertible appears likely to see its green shoe exercised for aggregate gross proceeds of $402.5 million. The proceeds will be used to buy back $80mm of stock and pay down the revolving credit facility.
We have assumed the company will pay down the entire $296mm outstanding on the revolver, leaving $550mm of the $600mm facility available ($50mm in letters of credit outstanding, L+ 137.5 to 237.5, matures 4/9/19). EEFT is a consistent and positive free cash flow generator. The company has good liquidity with pro forma cash of $414mm and $550mm available on the secured revolver.
Euronet used cash for the acquisition of HiFX, a UK money transfer company, earlier this year. The total purchase price was $242mm comprised of $185mm of cash and $57mm of stock.
The senior convertible bonds will rank behind the secured term loan A ($73mm outstanding) and future borrowings on the secured revolver.
The new convertibles score fairly well on our proprietary HOCS 1.5 (Hillside Overall Convertible Score) scales. With the bonds trading up to around 103 versus a stock price of about $55.50, the score array is now 58 Overall/61 Growth/52 Safety. A score of 50 is considered average, while a score of 70 is superior.