Think Childcare Ltd (ASX: TNK) advised the ASX today that it has received a non-binding and indicative buyout proposal from private equity group, Alceon Group Pty Ltd. The offer is for 100% of Think Childcare’s shares, and the indicative offer price currently stands at $1.351 – a premium on the current share price of $1.31.
The Think Childcare share price opened today at $1.31, up by 4.8%, after the announcement.
More details about the offer
Alceon Private Equity has indicated it is willing to offer all cash, or a combination of cash and unlisted shares in a newly incorporated holding company.
Think Childcare has granted Alceon a period of exclusivity until 18 December 2020 to complete its due diligence process. The company says the transaction is subject to various conditions such as regulatory as well as shareholder approval. As such, it has requested its shareholders not to take any action at this time.
What is Think Childcare and why might it sell the business?
Think Childcare owns and operates childcare facilities in Australia. It focuses on operating its 30 long day childcare facilities for children between the ages of 6 months and 6 years old.
The company has faced difficulties this year as coronavirus lockdown restrictions also closed down many of its childcare centres. As a result, the company is under pressure to service its debts. The latest balance sheet data for 30 June shows that Think Childcare has $35.8m liabilities that are due within a year, and $211.9m in the year following.
Although Think Childcare holds $11.8m in cash and has $8.48m of receivables due within 12 months, the much larger liabilities figure is casting a towering shadow over its liquidity and current market cap of just $76 million.
Think Childcare share price performance
As mentioned, childcare centres were among the first businesses shut down by the government when the pandemic struck. The Think Childare’s share price went from $1.41 at the start of 2020 to 60 cents by the end of March, at the height of the restrictions. The share price has since regained much of its value. It is trading up 4% at $1.30 at the time of writing.
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