G8 Education has announced a $301m capital raising. This provides headroom and relief from covenant testing in June and December quarters, Morgan Stanley notes.

The dividend is suspended with the exception of the 2019 deferred dividend which will be paid in October.

Equal-weight. Target is reduced to $1.00 from $1.90. In-Line industry view maintained.

Sector: Consumer Services.

Target price is $1.00.Current Price is $1.02. Difference: ($0.02) - (brackets indicate current price is over target). If GEM meets the Morgan Stanley target it will return approximately -2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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