The G8 Education Ltd (ASX: GEM) share price has returned from its trading halt this morning.
After initially surging as much as 11% higher, the childcare centre operator's shares are now down 4% to $1.03.
Why was G8 Education in a trading halt?
G8 Education requested a trading halt last week while it undertook an institutional placement and the institutional component of its entitlement offer.
This morning its shares returned to the ASX boards after successfully completing them and raising a total of $227 million at $0.80 per new share.
According to the release, the placement and institutional entitlement offer saw strong support from both existing and new investors. It revealed that there was a take up rate of approximately 99.7% by eligible investors under the entitlement offer.
Why is G8 Education raising funds?
G8 Education launched the equity raising primarily to strengthen its balance sheet during these tough times.
The funds raised will provide the company with additional liquidity and the financial flexibility required to see it through the tough market conditions caused by the coronavirus pandemic.
G8's Chief Executive Officer and Managing Director, Gary Carroll, explained: "We are very pleased by the strong support we have received from investors for the Placement and Entitlement Offer."
"The cash preservation and capital measures we have announced, including the equity raising, provide G8 with additional liquidity and financial flexibility to navigate this current period of market disruption. It allows us to maintain our high quality services to our families, helps us to retain our quality team, and puts us in a position of strength for the recovery phase."
Retail entitlement offer.
The company will now push ahead with the fully underwritten retail component of the entitlement offer to raise a further $74 million.
To be eligible for this, you need to be a shareholder at the record date of 7:00 pm (AEST) on April 15 and have a registered address in Australia and New Zealand.
This will be undertaken at the same price as the institutional placement and entitlement offer – 80 cents per new share.
