Think Childcare Ltd announces capital raising to acquire 4 childcare centres

Think Childcare Ltd (ASX:TNK) has announced that it will make some acquisitions.

| More on:

You鈥檙e reading a free article with opinions that may differ from The Motley Fool鈥檚 Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Think Childcare Ltd (ASX: TNK) has announced that it is going to acquire four new childcare centres. The acquisitions are being bought from third party vendors and its incubator partner at a multiple of four times earnings before interest, tax, depreciation and amortisation (EBITDA) after payroll tax.

These acquisitions will be fully funded by the proceeds from the capital raising. The remaining funds will be used for working capital and balance sheet purposes.

The projection of 12-month EBITDA for these centres is $1.42 million and the total initial purchase price (excluding earn-outs) will be $5.677 million. This will add 386 licensed places and the average occupancy at these centres is 75.5%.

The capital raising will be a non-underwritten institutional placement of approximately five million shares to raise around $10 million from professional and sophisticated investors. The shares issued will represent approximately 11.8% of Think Childcare鈥檚 issued share capital prior to the offer.

Think Childcare said that the offer price for the capital raising is $1.99, which is a discount of 5.2% to yesterday鈥檚 closing price.

On the face of it the acquisitions seem like decent purchases and will add to Think Childcare鈥檚 scale and profit.

However, it seems a bit unfair to the average retail investor that they won鈥檛 be given an option to take part in this capital raising and that it鈥檚 being done at a discount to the share price.

I could understand if some smaller shareholders are a little annoyed.

Management re-affirmed that the projected calendar year (CY) revenue will be around $88.5 million, projected CY18 EBITDA will be $14.2 million and CY18 net profit after tax (NPAT) will be $8.1 million.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on 鈴革笍 Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
鈴革笍 Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
鈴革笍 Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more

asx investor daydreaming about US shares
鈴革笍 How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more

person reading news on mobile phone
鈴革笍 Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more