Octain is right. They are using more debt to pay costs, like Allco did hence Allco pulled the plug themselves.
Quixis....how did they ever figure they could pay back all these loans?
They must've thought it was free money and that they could pay any valuation for all these centres because of course they'd go up in value forever. Maybe they didn't worry about the debt, let someone else take care of it later, and just pay themselves a nice salary while hiding under a complex business model. Sounds like Allco.
Also, what's really the difference between ABC Learning and Centro? Both expanded way too fast on deluded principals and have/are collapsing under debt. Not like ABC's child centres were all empty. They were busy.
If the banks pull the plug who can really blame them? Why take risky equity which can go down in value quickly? You really want equity in a company with no growth? Who can you sell to if you want out? This debt/equity swap makes no sense to me at all. No wonder GR seems to have trouble getting it over the line.
Only hope is a long term extension so they can sell the centres orderly. But it seems that banks just want to get these writedowns over with once and for all.
CNP Price at posting:
6.2¢ Sentiment: None Disclosure: Not Held
