Rights offer hits Ascendis Health shares

Group wants to raise R750 million

ASCENDIS Health shares took a knock on the JSE yesterday after the group announced that it would launch a fully underwritten renounceable rights offer to raise R750 million.

The group said yesterday that it would price the rights offer at R20 a share, representing a 4.6 percent premium to the 30-day volume weighted traded average on the date that the company first announced its intention to undertake the capital raising.

The share price shed 6.53 percent in early trade to R16.60 a share, declining from Tuesday’s closing price of R17.76. At the JSE close yesterday, however, the share was lower by 4.84 percent at R16.90.

It said the rights offer was fully underwritten by long-term investment company Coast2Coast Capital – the founder and majority shareholder which holds a 27 percent majority shareholding in Ascendis Health.

The group said the money raised would fund a significant portion of the deferred vendor consideration payment owed to the sellers of Remedica Holdings, an international pharmaceutical business acquired in the last year.

Last year, Ascendis Health acquired Remedica, a generic pharmaceutical manufacturer in Cyprus, for €260m (R4.28 billion).

Remedica supplies more than 300 generic pharmaceutical products to 100 countries primarily in emerging markets, including the Middle East, Africa and South America.

Chief executive Karsten Wellner said the full underwrite of the rights offer by Coast2Coast was an indication of support for Ascendis’ strategy and its long-term prospects.

“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 said.

In terms of the rights offer, each shareholder will receive 8.365 rights for every 100 shares held on the record date, being December 1.

The rights offer will open on December 4 and close on December 15. The group said a circular containing details of the rights offer would be available on the Ascendis Health website on November 28.

It said the total purchase consideration of €260m included a deferred payment of €90m to be settled three years post conclusion of the transaction.

“In November a strategic agreement was reached with the vendors to settle €50m of this deferred consideration in advance of the original due date and at a discount to its outstanding value,” the group said.

According to the group the proceeds of the rights offer will therefore be used to settle this accelerated payment, resulting in a significant reduction in the overall indebtedness of Ascendis Health as well as reducing the repayment risk and foreign exchange risk by settling a medium-term obligation at current exchange rates.