CPI Card Group Inc. Announces Proposed Secondary Public Offering of 1,000,000 Shares of Common Stock by Majority Stockholder

Rhea-AI Summary

CPI Card Group Inc. (Nasdaq: PMTS), a payments technology company, announced that certain stockholders affiliated with Parallel49 Equity have initiated a secondary public offering of 1,000,000 shares of the Company's common stock. The selling stockholders may grant underwriters a 30-day option for an additional 150,000 shares. CPI will not receive any proceeds from the sale, as all proceeds go to the selling stockholders. D.A. Davidson & Co. is the sole book-running manager for the offering.

The offering is subject to market conditions, with no guarantee of completion or final terms. A registration statement on Form S-3 has been filed and declared effective by the SEC. The Company has also filed a preliminary prospectus supplement and accompanying prospectus for the offering.

Positive

• Potential increase in stock liquidity due to more shares in public circulation
• No dilution for existing shareholders as the company is not issuing new shares

Negative

• Large shareholder (Parallel49 Equity) reducing stake, potentially signaling lack of confidence
• Possible downward pressure on stock price due to increased supply of shares

Insights

Financial Analyst

This secondary offering of 1,000,000 shares by the majority stockholder, Parallel49 Equity, is a significant event for CPI Card Group. It represents a potential dilution of existing shareholders' stakes and could impact the stock price in the short term. The additional 150,000 share option further increases this potential.

With a current market cap of $307,414,096, this offering of 1,000,000 shares represents approximately 3.25% of the company's total value. The move suggests that the major shareholder may be looking to reduce their position, which could be interpreted as a lack of confidence in future growth prospects.

However, it's important to note that CPI Card Group itself is not issuing new shares and will not receive any proceeds from the sale. This means the company's financial position remains unchanged, which is a positive aspect for current investors. The market's reaction to this news will be important to watch in the coming days, as it may provide insights into investor sentiment towards the company's long-term prospects.

Market Research Analyst

The secondary offering by CPI Card Group's majority stockholder could have several implications for the market dynamics of PMTS stock:

• Increased liquidity in the stock, potentially attracting more institutional investors
• Possible downward pressure on the stock price due to increased supply
• Change in ownership structure, which could influence future corporate decisions

The timing of this offering is intriguing, as it comes amidst a growing trend in digital payment solutions. CPI's focus on SaaS-based instant issuance aligns with this trend, but the majority shareholder's decision to sell might raise questions about the company's competitive position or growth trajectory in this evolving market.

Investors should closely monitor the pricing of the offering and any changes in trading volume, as these factors could provide insights into market sentiment and the stock's future performance. The involvement of D.A. Davidson & Co. as the sole book-running manager adds credibility to the offering, potentially mitigating some investor concerns.

LITTLETON, Colo.--(BUSINESS WIRE)-- CPI Card Group Inc. (Nasdaq: PMTS) (“CPI” or the “Company”), a payments technology company and leading provider of credit, debit and prepaid card and digital solutions, including Software-as-a-Service (SaaS) based instant issuance, today announced that certain stockholders affiliated with Parallel49 Equity (the “selling stockholders”) have commenced an underwritten secondary public offering of 1,000,000 shares of the Company’s common stock. In addition, the selling stockholders expect to grant the underwriters a 30-day option to purchase up to an additional 150,000 shares of common stock. The offering is subject to market conditions, and there can be no assurance as to whether or when the offering may be completed or as to the actual size or terms of the offering.

The selling stockholders will receive all proceeds from the offering. The Company is not offering any shares of common stock in the offering and will not receive any proceeds from the sale of common stock by the selling stockholders.

D.A. Davidson & Co. is acting as sole book-running manager for the offering.

A registration statement on Form S-3 (File No. 333-259511) relating to these securities has been filed with, and declared effective by, the U.S. Securities and Exchange Commission (the “SEC”). The Company has also filed with the SEC a preliminary prospectus supplement and accompanying prospectus for the offering. The offering will be made only by means of a prospectus and prospectus supplement. Copies of the prospectus and preliminary prospectus supplement may be obtained by contacting: D.A. Davidson & Co., Attention: Prospectus Department, 8 Third Street North, Great Falls, MT 59401, by telephone at (800) 332-5915, or by email at prospectusrequest@dadco.com.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any offer or sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.

About CPI Card Group Inc.

CPI Card Group is a payments technology company providing a comprehensive range of credit, debit, and prepaid card and digital solutions, including SaaS based instant issuance. With a focus on building personal relationships and earning trust, we help our customers navigate the constantly evolving world of payments, while delivering innovative solutions that spark connections and support their brands. We serve clients across industry, size, and scale through our team of experienced, dedicated employees and our network of high-security production and card services facilities—located in the United States.

Forward-Looking Statements

Certain statements and information in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the timing, size or consummation of the proposed offering. These forward-looking statements are based on the Company’s current expectations and beliefs concerning future developments and other information currently available. Such forward-looking statements, because they relate to future events, are by their very nature subject to many important risks and uncertainties that could cause actual results or other events to differ materially from those contemplated, including, but not limited to, the risks and uncertainties set forth under the heading “Risk Factors” in the preliminary prospectus supplement for the proposed offering and elsewhere in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and in other reports filed from time to time by the Company with the SEC. The Company cautions and advises readers not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except as required by applicable law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240930065667/en/

CPI Card Group Inc. Investor Relations:

(877) 369-9016

InvestorRelations@cpicardgroup.com

CPI Card Group Inc. Media Relations:

Media@cpicardgroup.com

Source: CPI Card Group

FAQ

How many shares are being offered in CPI Card Group's (PMTS) secondary public offering?

The secondary public offering involves 1,000,000 shares of CPI Card Group's common stock, with an additional 150,000 shares potentially available through a 30-day option granted to underwriters.

Will CPI Card Group (PMTS) receive any proceeds from this secondary offering?

No, CPI Card Group will not receive any proceeds from this secondary offering. All proceeds from the sale will go to the selling stockholders affiliated with Parallel49 Equity.

Who is managing the secondary public offering for CPI Card Group (PMTS)?

D.A. Davidson & Co. is acting as the sole book-running manager for CPI Card Group's secondary public offering.

What is the purpose of CPI Card Group's (PMTS) secondary public offering?

The secondary public offering allows certain stockholders affiliated with Parallel49 Equity to sell their shares. It does not raise new capital for the company but may increase the public float and liquidity of the stock.