Private hospitals group, Ramsay Healthcare is looking to raise a lot of money – $1.4 billion – very quickly, confirmation that the fallout from the COVID-19 pandemic is hitting every sector of the economy.
It is the biggest fundraising so far by an Australian company in the current crisis.
Ramsay has extensive private hospital chains in Australia and in parts of Europe, especially in the UK, Sweden, Denmark, Italy and France where the impact of the virus has been very severe.
The company revealed yesterday it is looking to raise $1.2 billion through an institutional placement and $200 million from a share purchase plan. It has also suspended dividends.
That will conserve cash.
The money raised by the issue will be used to pay down debt and strengthen its balance sheet at a time where private hospital operators around the world are facing uncertainty from the rise in the number of COVID-19 patients and the heavy investment involved in treating them.
The company is making the placement – which will be fully underwritten – at $56 a share, a modest 12.9% discount to its last traded price of $64.29 on Tuesday.
Ramsay will also offer existing eligible shareholders the opportunity to participate in a non-underwritten share purchase plan aimed at raising up to $200 million.
Given the company is seeking to raise fresh capital, it announced that it will temporarily suspend ordinary share dividend payments.
It also advised that it has received consents to amend or waive key banking covenants from lenders to the Ramsay Funding Group up to and including the December 2020 test.
CEO Craig McNally said yesterday that the healthcare systems in Europe where the company operates “have been under significantly more pressure” than in Australia.
Tapping shareholders for money “will strengthen Ramsay’s balance sheet and liquidity position, as well as increase financial flexibility during the unprecedented operating environment,” Mr. McNally said in the company’s statement to the ASX.
“More importantly, it will ensure that we can continue to pursue our growth initiatives and position us to take further advantage of other growth opportunities that may arise.”
