G8 EDUCATION SET FOR $100M CASH BOOST
Written on the 26 April 2016 by Nick Nichols
CHILDCARE centre operator G8 Education (ASX:GEM) is boosting its financial muscle by almost $100 million through the amendment of an existing $479 million notes program.
G8's planned new note program, which is issued in Singapore dollars, has already received preliminary approval from the Singapore Stock Exchange, paving the way for the notes to trade on the Asian bourse once issued. The amendment also requires shareholder approval.
The existing $S500 million ($479 million) note program will increase to $S600 million ($574.5 million), giving G8 Education an extra $95.5 million for new acquisitions, for working capital and to repay debt.
The move comes just two months after the Gold Coast company dipped into cash reserves for an early payout of a $148 million ($S155 million) note issue that was due for redemption in July this year.
After paying out this tranche of notes in February, the company's debt levels fell to about $387 million. About $249 million of this is due for redemption in May next year.
G8 Education has spent the past year consolidating acquisitions with just 44 new childcare centres acquired in calendar 2015.
The company has a portfolio of 489 childcare and education centres in Australia and Singapore.
A business overview accompanying the amended note issue has revealed the group has spent about $9 million improving existing centres.
It shows that it achieved 11 per cent growth in in EBIT (earnings before interest and tax), or an increase of $8.3 million, on a like-for-like basis in 2015 compared to a year earlier.
This is despite falls in like-for-like peak occupancy of up to 2 percentage points for centres acquired in 2013 or before.
Head office costs per centre have also been reduced, falling from $710 per licenced childcare place in 2011 to $439 in 2015.
The company had a total of 35,221 licensed places at the end of December last year.
Managing director Chris Scott says 'disciplined consolidation in high demand areas' will remain a priority for the company.
Author: Nick Nichols