Ascendis weighs JSE delisting

Loss-making health group Ascendis, which is battling a R7bn debt pile that dwarfs its market value, says it is seriously considering selling off all its businesses and delisting from the JSE. This restructuring plan, set to be voted on by shareholders in October, would see it give up its most profitable businesses.

Loss-making health group Ascendis, which is battling a R7bn debt pile that dwarfs its market value, said on Monday it is seriously considering selling off all its businesses and delisting from the JSE.

The option of remaining a listed group, while still being reviewed, is challenged by plans that will significantly reduce the scale of the group, Ascendis said. This restructuring plan, set to be voted on by shareholders in October, entails giving up its most profitable businesses.

The group is considering the costs of staying listed, amid a cash shortage for growth projects for the businesses it would be left with under this plan.

Shareholders are set to vote on a restructuring deal that could leave Ascendis with assets solely in SA, or three businesses: its local consumer brands business, which includes brands such as Solal; its pharmaceutical business; and parts of its medical device business. It would give up its profitable European businesses, including crown jewel Cyprus-based pharmaceutical business Remedica.

CEO Mark Sardi has acknowledged the group would need to consider whether it is big enough for the local bourse, and also need to consider offers from interested buyers.

The company has been grappling with its debt burden resulting from an international acquisition spree. It restructured debt in mid-2020 to gain space to complete asset sales, notably of Remedica, which remains highly profitable, though it ultimately struggled to get a price it found acceptable.

Part of the restructuring was undertaken via a payment in kind, a type of high-risk loan that allows borrowers to pay interest with additional debt.

Updating the market on its operations on Monday, Ascendis said headline loss per share from continuing operations would be 303.7c to 343.8c in the year to end-June from a loss of 202.3c a year ago.

This implies a headline loss from continuing operations of up to about R1.68bn, while on Monday the group had a market value of R259m.

Earnings from continuing operations were negatively affected by a combination of net funding costs, a one-off transaction and restructuring-related costs, as well as the current costs of the head office, the group said.

Net funding costs increased 37% to R1.08bn, while one-off transaction and restructuringrelated costs increased 21% to R274m. The group is also battling to reduce head office costs, which came in at R143m from R142m in the prior year.

A head office restructuring programme began in April aimed at aligning it with the new structure of the group, which includes retrenchments. The group also gave notice to vacate its Bryanston head office in July.

Group revenue from continuing operations is likely to be R2.16bn to R2.27bn, which is flat from a year ago. But Ascendis said core profit from continuing operations, before office costs, is expected to as much as double to R143m.

Ascendis shares were unchanged at 53c in afternoon trade on Monday, having lost 98% over the past five years.