DURBAN - ASCENDIS Health yesterday informed its shareholders that it had up to the end of April to strike a deal with its lenders that would see the South African-based global health and care company recapitalise its business in order to survive.
Ascendis has been struggling to pay off its huge debt of R6.9 billion as at the end of June, leading to the group seeking ways and means to solve its short-term liquidity challenges.
At the beginning of February the healthcare group announced that Blantyre Capital and L1 Health GP SARL (L1 Health) had increased their exposure to the company’s debt to more than 75 percent of the aggregate exposure of the company’s consortium of external lenders.
The shareholders were further advised that Ascendis was actively exploring strategic solutions with Blantyre and L1 Health for a recapitalisation and restructure of Ascendis Health and its subsidiaries as an alternative to a divestment programme.
As a result Ascendis has entered into a forbearance agreement with L1 Health, Blantyre and Absa Bank, in its capacity as agent for the senior lenders, to address the company’s short-term liquidity requirements and other potential events of default.
“Under the forbearance agreement, the forbearance creditors (L1 Health and Blantyre) have agreed not to take enforcement action in respect of the non-payment of interest and certain other events of default until April 30, 2021,” the group said.
Ascendis added that the forbearance period, which is April 30, might be extended by an agreement between the company and the forbearance creditors.
“If the company cannot reach agreement with L1 Health and Blantyre on a group recapitalisation structure by the end of April, there is a risk that the forbearance period may not be extended, and the senior lenders will proceed with enforcement or any other action against the company,” the group said.
In the meantime, Ascendis Health was exploring different transaction structures for the group’s recapitalisation that would maximise value preservation and restore its balance sheet stability by reducing high levels of debt.
Ascendis Health has an international portfolio consisting of Remedica, which was acquired for €260 million (R4.75 billion) in 2016, Sun Wave and Farmalider and South African operations, which consists of Medical Devices, Consumer Health, Ascendis Pharma, Animal Health and Biosciences.
The group said the parties aimed to reach agreement on the transaction structure for the group recapitalisation by the end of April, which should lead to an extension of the forbearance period.
Ascendis Health shares closed the day 10.71 percent lower at R0.50 a share on the JSE yesterday.
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