trading halt?, page-2

raising money for 200 childcare centres Childcare centres on the money
Andrew Fraser


October 08, 2004
LISTED childcare company ABC Learning Centres is taking advantage of favourable market sentiment by raising an extra $100 million from the market to fund the purchase of 200 more childcare centres in the coming year.

Trading in ABC shares was suspended yesterday as chief executive Eddy Groves continued talks with institutions in Brisbane as he sought to raise $400 million for the company.

ABC originally envisaged raising $300 million to fund the $340 million takeover, announced last month, of major rival Peppercorn Management and its associated companies, Peppercorn Investment Funds and Child Care Centres Australia.

But market sources said there had been such a good reaction to the offering that the company had decided to raise a further $100 million to help fund the acquisition of more centres, already identified by both Peppercorn and ABC.

ABC operates about 350 childcare centres while Peppercorn operates 450, but each company has a range of negotiations with individual centres in the pipeline, which are likely to come to fruition in the next 12 months.









Each company is talking to about 100 centres, and the cost of the combined 200 identified would be about $100 million. Market sources said it made more sense for the company to raise that money now instead of having to go back to the market in a few months and raise more.

Of the extra $100 million to be raised, $75 million will come through conventional means, but the company's existing shareholders will have the opportunity to purchase more shares to raise the other $25million.

Mr Groves and his wife Le Neve own about 30 per cent of the company, and it is unknown whether they will boost their own holdings as part of the build-up.

The other unknown is the final price of Peppercorn Investment Funds which owns the properties that the childcare centres run by Peppercorn Management are on.

Under the guidance given to the market at the time of the takeover announcement, $42million was allocated for the purchase of Peppercorn Investment Funds.

The two parties were due to settle on a final price today, but this has been delayed until Monday, although it is not expected there will be a bigger call than $42 million.

The $400 million will be raised through the issue of 100 million shares at $4 each, a price well above the $3.55 at which ABC was trading before the announcement of the takeover. It is, however, below ABC's last trading price of $4.40 before trading in the shares was suspended yesterday.