Ascendis Health announced the launch of a fully underwritten renounceable rights offer to raise R750 million to settle a significant portion of the deferred vendor consideration payment owed to the sellers of Remedica Holdings, an international pharmaceutical business acquired in 2016.
The rights offer is priced at R20 per share, being a premium to the current market price, as the board of Ascendis Health firmly believes the current share price is not reflective of the company’s intrinsic value. The rights offer is fully underwritten by long-term investment company Coast2Coast Capital, the founder and majority shareholder behind Ascendis Health.
Commenting on the launch of the rights offer, Dr Karsten Wellner, CEO of Ascendis Health, says: ‘The full underwrite of the rights offer by Coast2Coast is 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.’
Ascendis Health acquired Remedica Holdings, a generic pharmaceutical manufacturer based in Cyprus, in August 2016. The total purchase consideration of €260 million included a deferred payment of €90 million to be settled three years post conclusion of the transaction. In November 2017, 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. 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.
Ascendis Health CEO Dr Karsten Wellner says: ‘Ascendis’ current focus is on reducing debt, bedding down recent acquisitions while focusing on our internal organic growth, improving cash conversion both locally and internationally with selected value adding projects to further increase overall group profitability and ultimately shareholder value.’
Terms of the rights offer
Each shareholder will receive 8.365 rights for every 100 shares held on the record date, being Friday, 1 December 2017. The issue price of R20 represents a 4.6 percent premium to the 30-day volume weighted traded average price as at the date the company first announced its intention to undertake the capital raising. The rights offer will open on Monday, 4 December and close on Friday, 15 December.