Api swallowed to repay debt
The problems besetting ABC Learning Centres have caused more market upheaval, with the Api Fund and the Australian Social Infrastructure Fund (ASIF) today announcing plans for a merger.
Api has been devalued over the past few months and has a significant stake in child care centres across Australia and New Zealand.
In a joint statement to the Australian Securities Exchange (ASX) and Australia Pacific Exchange (APX), the responsible entity for both funds, Austock Funds Management Limited (AFML), said: “It is in the long-term interests of unit holders in both funds to merge.”
At the same time, Api released a statement explaining that it had entered into two arrangements that will result in a decrease in its debt.
The recent decline and volatility in equity, listed property and infrastructure markets has resulted in a decrease in Api’s portfolio of 24.9 per cent between December 1 and March 31.
Api has sold securities from its portfolio and conducted a rights issue that raised $13.9 million. It was required to raise the money by its banker, National Australia Bank (NAB), because of a 12 per cent decline in the value of its portfolio since mid-February.
The fund had initially undertaken the rights issue, which was offered to three of Api’s major shareholders, including ASIF, in order to raise enough funds to avoid selling securities in the current market climate.
However, the response to the rights issue was poor.
Api owns nearly 15 million units of the AEU, an ASX-listed property trust that in December last year owned 421 childcare centres across Australia and New Zealand.
Approximately 96 per cent of their facilities are leased to ABC Learning Centres.
AFML believes that merging Api and ASIF will benefit both funds by broadening their asset bases and increasing their access to gearing.
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