Dye & Durham shares jump as it hires Goldman, Canaccord for possible payments unit sale

financialpost.com:

Canadian legal software provider Dye & Durham Ltd. has hired Goldman Sachs Group Inc. and Canaccord Genuity Group Inc. to advise it on a potential sale of non-core assets, including its financial services division. The shares jumped.

The Toronto-based company had been on an acquisition spree for several years, but has faced growing investor concerns about its leverage and pledged during a September analyst call to get it under control. The stock suffered a bruising 19 per cent fall that day after it reported a larger-than-expected quarterly loss, which it attributed largely to higher debt financing costs.

“Despite our strong business performance and liquidity position, we understand our shareholders would like us to reduce our leverage ratio,” chief executive Matthew Proud said in a statement Monday. “We strongly believe this strategic review will accelerate this process.” Shares of Dye & Durham were up 12 per cent to $12.05 as of 2:52 p.m. in Toronto.

One item up for review is the financial solutions business, which includes assetsacquired from Telus Corp. for $500 million in a deal announced in 2021. At the time, Dye & Durham called it the largest non-bank payment platform in Canada, noting that it processed 140 million bill and tax payments and moved more than $1.3 trillion annually, and said it would use the infrastructure to help move money on residential real estate deals.

The financial business may be generating about $60 million in annual earnings before interest, taxes, depreciation and amortization, “although this is unclear,” BMO Capital Markets analyst Thanos Moschopoulos said in a note.

Dye & Durham said it will examine a number of options to get to its goal of reducing total net debt leverage to less than