Bapcor Launches $200M Equity Raise at 65% Discount to Shore Up Balance Sheet
Bapcor launches $200 million equity raise to strengthen balance sheet
Bapcor Limited (ASX: BAP) has announced a fully underwritten $200 million equity raising alongside its Half Year Financial Results for the six months ended 31 December 2025. The capital raising represents a substantial recapitalisation effort as new CEO Chris Wilesmith executes his turnaround strategy.
The offer price of $0.60 per share represents a 48.4% discount to the theoretical ex-rights price (TERP) of $1.16 and a 65.0% discount to the last close price of $1.715 on 18 February 2026. Approximately 333 million new shares will be issued under the raising, representing 98% of existing shares on issue.
Chris Wilesmith, CEO and Managing Director
“Raising $200M of equity will improve our financial flexibility and business resilience in the current market conditions and provide headroom to focus on ‘getting the engine running’ to improve our operating performance and execution.”
The announcement marks Wilesmith’s first results release since joining Bapcor, coming just six weeks into his tenure. The substantial equity injection signals management’s commitment to deleveraging the balance sheet and positions the company for turnaround execution under new leadership.
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Understanding entitlement offers and why companies use them
The equity raising comprises a $150 million non-renounceable entitlement offer and a $50 million pro-rata institutional placement. Under the entitlement structure, eligible shareholders can subscribe for 1 new share for every 1.36 shares held as at the record date of 7:00pm (Sydney time) on Monday, 2 March 2026.
A non-renounceable entitlement offer means shareholders cannot sell or transfer their entitlements to other investors. Shareholders who choose not to participate will not receive any value for their unused entitlements, resulting in dilution of their ownership stake. The offer is fully underwritten by Macquarie Capital (Australia) Limited, providing certainty of funds regardless of shareholder participation levels.
Eligible retail shareholders who take up their full entitlement can apply for additional shares under an oversubscription facility, capped at 35% of their entitlement, subject to availability from any shortfall. All eligible Bapcor directors intend to participate in the raising, demonstrating board-level confidence in the recapitalisation strategy.
First half delivers underlying profit amid challenging conditions
Bapcor reported underlying NPAT of $5.5 million for 1H26, in line with previous guidance, though down 87.3% on the prior corresponding period. The statutory loss of $104.8 million includes $110.3 million in significant items on a post-tax basis, of which only $2.6 million impacts cash flow.
Underlying revenue of $973 million fell 2.3% compared to 1H25, while underlying EBITDA of $76.9 million declined 40.4%. Cash conversion remained solid at 93.4%, demonstrating continued operational discipline despite challenging trading conditions.
Chris Wilesmith, CEO and Managing Director
“The first half was challenging, with parts of the business impacted by increased competition and cost pressures, the loss of industry knowledge, and pricing and inventory issues. Encouragingly, we are starting to see green shoots, with positive sales momentum emerging across Networks, Retail and New Zealand.”
The CEO emphasised the company’s immediate focus on lifting financial performance, improving customer experience through competitive pricing and inventory optimisation, and rebuilding capability across the business, particularly in the Retail and Trade segments.
Significant items breakdown
The $110.3 million in post-tax significant items predominantly comprises non-cash charges, with the largest component being a $99.9 million impairment of New Zealand assets. This impairment reflects further deterioration in macroeconomic conditions, with margins adversely impacted as customers shift to lower-margin products amid increased competition.
Other significant items include:
- $3.9 million store impairment of property, plant, equipment and lease assets across the network
- $2.6 million restructuring costs related to previously announced cost savings initiatives
- $3.0 million inventory stock losses in the Trade segment’s tools and equipment business
- $4.0 million inventory revaluation in the Retail and Trade segments
- $4.6 million in payroll provisions covering the period from February 2020 to December 2025
The payroll issue came to light during preparation for implementing a new Human Resources Information System (HRIS) and affects specific team members. An externally facilitated balance sheet review also identified the need to restate FY25 comparatives, largely due to issues in the Trade segment including previously announced non-recurring margin impacts.
Balance sheet transformation underway
Bapcor ended 1H26 with net debt of $387.3 million, representing a leverage ratio of 3.39 times EBITDA. The company secured covenant amendments from its lending syndicate, including a temporary increase in the net leverage ratio covenant to 3.5 times adjusted EBITDA for both the 31 December 2025 and 30 June 2026 testing points.
Following completion of the equity raising, the proforma leverage ratio will fall to 2.13 times immediately. Management expects leverage to reduce further to approximately 1.2 to 1.5 times by 30 June 2026, supported by $60 million to $75 million of cash flow generation in 2H26 through specific initiatives targeting inventory reduction, receivables management and operating cash flow improvement.
| Metric | 31 Dec 2025 Actual | Post-Raise Proforma | Target 30 Jun 2026 |
|---|---|---|---|
| Net debt | $387.3M | Reduced by $200M | Further reduced |
| Leverage ratio | 3.39x | 2.13x | 1.2-1.5x |
The Board elected not to declare an interim dividend, preserving cash to support the deleveraging strategy and operational turnaround initiatives.
FY26 outlook targets recovery
Management has provided full-year underlying EBITDA guidance of $150 million to $160 million on a post-AASB16 basis, or $74 million to $79 million on a pre-AASB16 basis. The guidance reflects confidence in the stabilisation and recovery trajectory under the new leadership team.
Strategic priorities for the remainder of FY26 include:
- Lifting financial performance by creating an environment for team members to succeed
- Improving customer experience through competitive pricing and inventory optimisation
- Rebuilding capability across the business, particularly in Retail and Trade segments
Bapcor has made progress on strategic imperatives during the first half, including implementing regular customer feedback through a Net Promoter Survey, optimising the store network by opening new locations and closing underperforming stores, and simplifying core business processes such as eliminating intercompany sales between segments.
The outlook provides investors with clear financial targets to monitor execution progress under Wilesmith’s leadership. The expected $60 million to $75 million cash flow improvement in 2H26 will be a key metric demonstrating management’s ability to drive operational efficiency and working capital discipline.
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Key dates for shareholders
Shareholders considering participation in the entitlement offer should note the following critical timeline:
- Record Date: 7:00pm (Sydney time) Monday, 2 March 2026
- Institutional Entitlement Offer closes: 5:00am (Melbourne time) Friday, 27 February 2026
- Retail Entitlement Offer opens: 9:00am (Melbourne time) Thursday, 5 March 2026
- Retail Entitlement Offer closes: 5:00pm (Melbourne time) Thursday, 19 March 2026
- Retail allotment: Thursday, 26 March 2026
The institutional component closes Friday, 27 February 2026, with new shares from both the institutional offer and pro-rata placement expected to settle on Thursday, 5 March 2026 and commence trading on Friday, 6 March 2026. Eligible retail shareholders will receive a detailed offer booklet on Thursday, 5 March 2026 containing personalised entitlement and acceptance forms.
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