Corporations Law_Refund plan for angered Child Care stakeholders

On the 27th of March 2003, Child Care Centres Australia issued the share offer prospectus, to raise capital amounted to a sum of $8.5 million. The various directors signed the prospectus on the 2 May 2002 to approve the offer. The capital raised was meant for the acquisition of 46 child-care centers in Western Australia, which belong to two companies, Mulberry Tree and Jellybeans groups.

The capital raising was a success until there was a dramatic downgrading of profit forecasts. The profit forecasts given in the prospectus were $2.8 millions for 2002-2003 and $5.2 millions for 2003-2004. The new forecast given for 2002-2003 was $205,000, down from $2.8 millions. The reason given by the group was drastic decline in the number of children in its centres due to its ‘occupancy improvement program’ that drove up the costs. Child Care Centres Australia said that the group only knew about this shortfall of occupancy rates shortly after the capi...