Bapcor’s $200M Equity Raise Priced at $0.60, 48% Discount to TERP

Context and Background

Bapcor Limited (ASX: BAP), a leading provider of aftermarket vehicle parts and services across Australia and New Zealand, has announced a significant equity raising initiative designed to strengthen its balance sheet and support an operational turnaround. The company reported a challenging first half of FY26, with a statutory loss of $104.8 million, largely driven by impairments and restructuring costs. Against this backdrop, Bapcor is seeking to raise approximately $200 million through a fully underwritten equity raising.

Details of the Equity Raising

The equity raising comprises a 1-for-1.36 pro rata accelerated non-renounceable entitlement offer priced at $0.60 per new share, alongside a $50 million institutional placement. The retail entitlement offer, which forms part of the $150 million entitlement component, opened on 5 March 2026 and is scheduled to close on 19 March 2026. Eligible retail shareholders in Australia and New Zealand are invited to participate at the same price offered to institutional investors.

This offer price represents a substantial discount of 48.4% to the theoretical ex-rights price of $1.16 and a 65% discount to the last closing price before the announcement. The new shares issued will rank equally with existing shares from the date of issue.

Strategic Purpose and Use of Proceeds

The primary objective of the equity raising is to reduce Bapcor's net debt, which stood at $387.3 million as of 31 December 2025, and to enhance the company’s financial flexibility. This capital injection is expected to provide the company with the headroom necessary to focus on operational improvements, including improving customer experience, optimising inventory and pricing strategies, and rebuilding team capabilities under new leadership.

New CEO Chris Wilesmith and his executive team bring extensive automotive and retail experience, signalling a renewed focus on stabilising and growing the business. The company has already initiated actions to address competitive pressures, supply chain challenges, and elevated cost environments.

Underwriting and Offer Mechanics

The equity raising is fully underwritten by Macquarie Capital, providing certainty of completion. Eligible retail shareholders who fully subscribe to their entitlement and are not related parties may also apply for additional shares up to 35% of their entitlement through an oversubscription facility, subject to availability and board discretion.

Importantly, the entitlement offer is non-renounceable, meaning shareholders cannot trade or transfer their rights. Shareholders who do not participate will experience dilution of their holdings.

Outlook and Risks

Bapcor expects underlying EBITDA for FY26 to be between $150 million and $160 million post-accounting adjustments, with a net leverage ratio forecast to reduce to approximately 1.2 to 1.5 times by 30 June 2026. The company has secured temporary covenant relief from lenders to support this transition period.

However, risks remain, including market competition, operational execution challenges, regulatory compliance, and the ability to meet financial covenants. The company has disclosed these risks transparently, underscoring the importance of investor due diligence.

Overall, this equity raising represents a pivotal step in Bapcor’s strategy to stabilise its financial position and lay the foundation for sustainable growth in the evolving automotive aftermarket sector.