G8 Education is raising $301m through investment bank UBS and RBC Capital markets.
The news comes after the childcare provider’s share price has almost halved since the start of the year as it battles with COVID-19 disruptions, with its market value at around $500m.
Shares are being sold at 80c each, a 25.9 per cent discount to the last closing price of $1.08 on April 2.
The group will raise $167m for a 1 for 2.2 underwritten entitlement offer and $134m through an underwritten placement.
The funds will be used to pay debt and increase cash on the balance sheet, with its gearing level moving from 2.3 times to 0.4 times its earnings before interest, tax, depreciation and amortisation.
G8 Education entered a trading halt at the start of the month, pending an update on its trading position.
Allan Gray Australia is counted as one of the company’s substantial shareholders and has been buying up stock in the business.
The company said in a statement on Thursday it would be eligible for various government support packages, including the Early Childhood Education and Care Relief Package, the JobKeeper package and state based packages.
The measures will enable its childcare centres to remain open and keep people employed.
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