Ascendis Health is embarking on a R750-million rights issue to settle much of the deferred vendor consideration payment outstanding from the 2016 acquisition of Cyprus-based pharmaceutical manufacturer Remedica.
The group acquired Remedica for €260-million, which included a deferred payment of €90-million to be settled within three years of the conclusion of the transaction.
However, in November, a strategic agreement was reached with the vendors to settle €50-million of this deferred consideration in advance of the original due date and at a discount to its outstanding value, explained Ascendis CEO Dr Karsten Wellner.
The proceeds from the fully underwritten renounceable rights offer, which is priced at R20 a share, will reduce the overall indebtedness of Ascendis and reduce the repayment and foreign exchange risk by settling a medium-term obligation at current exchange rates.
The reduction of debt, along with bedding down recent acquisitions, internal organic growth and improving cash conversion both locally and internationally, is a current focus for Ascendis.
“Through this capital raise, we will significantly and immediately reduce our debt position to one that is more in line with our stated target capital structure while simultaneously reinforcing the flexibility of our balance sheet,” Wellner commented, adding that the full underwrite of the rights offer by Coast2Coast Capital was an indication of support for Ascendis’ strategy and its long-term prospects.
The rights offer will open on December 4 and close on December 15.