Payzone is looking to raise £31.8m through a share issue to fund its working capital requirements and medium-term capital expenditure plans.

The company was created last year through a merger of Alphyra and Cardpoint but has since been beset by problems, including legal action by two senior former executives and a suspension of its shares.

The money, which is being raised through a placing of 137.3 million shares at 0.20p each, is intended to help the company regain its footing as it prepares to post a £24m pre-tax profit loss this September.

"Since the merger everything's been on hold and we have not had a chance to take a good look at how the businesses are integrated and areas of growth," said a source at Payzone.

Trading in shares resumed on Tuesday after being suspended in January following court proceedings by former chief executive John Nagle and former chief financial officer John Williamson. The pair claimed their dismissals were in breach of contract. They had their contracts formally terminated in March at an extraordinary general meeting.

Williamson has dropped his legal dispute but Nagle, who has been replaced by Mile Maloney as chief executive, is carrying on.

"This fundraising puts Payzone on a firm financial footing," said Maloney. "We are now in a position to invest significantly in the business, to implement a three-year growth plan and capitalise on Payzone's strong market positions throughout Europe."