DURBAN, South Africa — South African based health and wellness Company, Ascendis Health has reached a restructuring and recapitalization agreement with its lenders Blantyre Capital and L1 Health
Following the agreement, Ascendis hopes to settle its outstanding debt of R7.61 billion ($447 million).
This agreement comes after the two creditors increased their exposure to the company’s debt to an aggregate of over 75%.
The company said the proposed transaction required 75 % of shareholder approval.
According to Chief executive Mark Sardi who was speaking during a webcast presentation, this agreement is the best outcome for all stakeholders considering the company’s unstable debt levels.
“The agreement provides an opportunity to protect the value of the company’s South African assets, as well as the interests of all stakeholders, including shareholders, creditors, suppliers, customers and employees,” Sardi said.
Should the company fail to receive the required shareholder support, the senior lenders would then assume rights of the company and Ascendis would be placed in business rescue.
The company got into debt in 2016 when it acquired Cyprus-based Remedica for 260 million euros and Europe’s leading sports company Scitec for 170 million euros.
The company had hoped that this acquisition move will lift its market capitalization to R11bn.
Contrary to their expectation, the move made the company plunge into serious debt, weak earnings growth and a market capitalization of only R410 million as of yesterday.
Sardi has faulted the company for its debt stating that the group found itself in this position due to these acquisitions.
“The acquisitions made in 2016 and 2017 were financed mostly by obtaining debt, and some people believe the company paid a lot of money to land those acquisitions, and the debt has continued to roll over the past few years, which has been problematic for the business,” Sardi said
The group said under the terms of the agreement, lenders would exchange their debt interests for Ascendis Health’s European subsidiaries, Remedica, Sun Wave Pharma and Ascendis’ 49 percent shareholding in Farmalider.