SOUTH AFRICA – Shareholders of embattled Ascendis Health have overwhelmingly approved a restructuring deal that will leave it a solely SA player and could see it soon delist from the JSE.
In total, 98.53% of Ascendis shareholders have approved restructuring aimed at solving its unsustainable debt structure, and which may see it delist
Just more than 98% of shareholders approved a restructuring transaction that will now kick off a process of management engaging with potential investors about remaining assets, seeking to unlock value from a group that has seen its shares lose 92% of their value over the past three years.
These remaining assets, with turnover of US$134.3 million (R2bn), will be left after the group hands over and sells assets bringing in R6.2bn, in exchange for the extinguishing of US$503.7 million (R7.5bn) in debt, leaving it with €15m in borrowings, but also new facilities.
Ascendis, valued at R323m on the JSE, has been choking on a debt pile that stood at a net R6.7bn at the end of June, racked up during an acquisition spree that netted its crown jewel, Cyprus-based pharmaceutical maker Remedica, which remains highly profitable, but ultimately threatened its very survival.
As part of a restructuring exercise undertaken in 2020 to buy time to sell assets, Ascendis’s agreement with lenders included a high-risk loan structure that allows borrowers to pay interest with additional debt.
Finance costs alone totalled R1.1bn in the group’s year to end-June, when Ascendis made a R1bn loss, while transaction and restructuring costs came in at R274m.
The positive vote means Ascendis will hand over assets including Remedica, leaving it with three businesses in SA: its local consumer brands business, which includes brands such as Solal; its pharmaceutical business; and parts of its medical device business.
High debt levels, restructuring costs, rising finance charges and the Covid-19 pandemic have all weighed on Ascendis Health’s annual performance. However, the company is now charting a course with slimmed down operations after a restructuring plan left it with just three SA businesses.