Ascendis Health Is Said to Mull Further Sales to Cut Debt
(Bloomberg) -- Ascendis Health Ltd., already considering an offer for its Remedica unit, is planning to sell other key businesses as the South African company battles to service debt and ensure survival, according to people familiar with the matter.
The debt-laden maker of multivitamins, probiotics and pet nutritional supplements received an unsolicited offer for Cyprian unit Remedica last month, providing relief for the biggest South African loser on Johannesburg’s stock exchange last year. Ascendis has earmarked its bioscience division for an additional sale, said the people, who asked not to be identified as the deliberations are private.
The Remedica business has been valued by Ascendis at about $400 million, compared with a 2016 purchase price of 260 million euros ($295 million), the people said. If the as-yet-unnamed buyer agrees to meet that price, it would generate proceeds of more than double Ascendis’s current market capitalization of 2.4 billion rand ($176 million).
The biosciences unit was identified last year as non-core to Ascendis’ longer-term strategy and accordingly flagged for sale, it said in a statement Friday. The $400 million valuation for Remedica is “unsubstantiated” and the Ascendis’s board is “still involved in negotiations regarding the Remedica offer, the outcome of which may have an effect on the price of the company’s securities,” the company said.
On Wednesday, Ascendis said South African investment firm Legae Peresec Ltd. increased its stake in the company to 5 percent.
Under Chief Executive Officer Thomas Thomsen, Ascendis has started a review of its business to bring down total liabilities of more than 9 billion rand. The company has 200 million rand in outstanding payments this year and about 4.4 billion rand due in 2021, according to data compiled by Bloomberg.
The 2018 share slump has had implications for its largest shareholder, private-equity firm Coast2Coast Capital. Its Chief Executive Officer Gary Shayne, along with his spouse and associated companies, have been forced to sell or transfer about 225 million-rand worth of Ascendis shares since November. Most of the disposals were triggered as the stock was used as collateral for loans. The company plans to release cash flow statements to lenders by the end of the month, one person said.
The stock has climbed 27 percent this year, compared with 1.4 percent on the benchmark FTSE/JSE Africa All Shares Index. Ascendis shares rose 0.6 percent to 5.30 rand as of 2:10 p.m. in Johannesburg, after gaining 1.2 percent on Thursday.
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