Ascendis hoping to be debt free after selling three business units

Ascendis says a head office cost-reduction programme will progress over six to nine months. Photo Supplied

Ascendis says a head office cost-reduction programme will progress over six to nine months. Photo Supplied

Published Feb 3, 2022

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ASCENDIS Health, which has narrowly averted going into business rescue, should be free of debt, with some cash to spare to rebuild, following the planned sale of three subsidiaries.

The company, which has a new board after shareholders opposed the restructuring plans of the previous management that had included a rights issue, said late on Monday that the company will only be left with its consumer brands business after the planned disposals. This business comprises seven main vitamin and supplement brands such as Solal, Vitaforce and Bettaway, as well as manufacturing capacity.

The share price slipped 4.88 percent to 78 cents by yesterday afternoon, an indication of how badly the company has performed, consider that it was trading at R22.75 five years ago.

The board, now chaired by Harry Smit who had led the group of shareholders who voted out the last board, said they were now focusing on optimising operations by maximising infill rates, eliminating unnecessary costs, increasing production and operational efficiencies, and investing more into marketing and product development.

A head office cost-reduction programme would progress over six to nine months, the company said.

The three disposals would “leave the business debt-free and with approximately R200 million of cash reserves after accounting for costs and deductions, to reinvest into the rebuilding of the Ascendis group’s core operations,” they said.

Pharma-Q and Imperial Logistics will acquire 49 and 51 percent, respectively, of Medicine Developers International, Pharmachem Pharmaceuticals, Alliance Pharma and Ascendis Pharma, for R375m in total.

Ascendis Pharma is a distributor of medicines, with brands in the gastrointestinal tract, cough and cold, pain, diabetes and niche-generic therapeutic segments of the market.

The R375m would be settled by way of set-off against the portion of the R550m that was lent to Ascendis by Apex Management Services and Pharma-Q Holdings.

Ascendis would also sell its Skin and Body business unit comprising the Nimue business to Amka Products for R102m.

Also being sold was Ascendis’ interests in the Scientific Group, Surgical Innovations, SI and its subsidiary Ortho-Xact, which were distributors of mostly imported medical devices, orthopaedic limb reconstruction equipment and in vitro diagnostics equipment and consumables.

“The board believes there is opportunity to optimise and expand the company by investing into the wider consumer products sector and build scale once the cash to reinvest is available,” the group said.

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