Ascendis is considering taking the firm private after it completes recapitalisation
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ASCENDIS Health said yesterday that it was considering taking the company private as an option in the short-to-medium-term after it completes its recapitalisation programme.
Ascendis, the South African health and well-being company, which is grappling with a R7 billion debt burden, also said that it was contemplating the sale of its remaining business. Ascendis acknowledged that it was at a critical strategic juncture and actively evaluating the value creation opportunities available arising from the successful completion of the group recapitalisation.
“The option of remaining a listed group, while still being reviewed, is challenged by the significantly reduced scale of New Ascendis Health, the costs associated with remaining listed and limited capital availability in relation to various growth opportunities in the remaining businesses. “Noting the board has engaged with the various interested parties in the remaining assets and is forming a perspective on the viability and value proposition of a sale of the remaining businesses in the group over the short-to-medium term, including the option of taking the New Ascendis Health private,” said the group.
Earlier this month, Ascendis announced the recapitalisation to address its debt and a divestment programme aimed at selling all the group’s assets, except for Farmalider, Pharma South Africa and Consumer South Africa, to stay alive.
However, the company said yesterday the board was in talks with prospective buyers for what was left of the business.
“The board has engaged with the various interested parties in the remaining assets and is forming a perspective on the viability and value proposition of a sale of the remaining businesses in the group over the short-to-medium term, including the option of taking the New Ascendis Health private,” said the group.
Ascendis has previously announced the sale of its South African businesses Respiratory Care Africa and Animal Health.
The group said year-on-year revenue from continuing operations was largely flat and expected to close within a range of R2.16billion to R2.27bn compared to R2.203bn a year earlier.
The group said earnings from continuing operations were negatively impacted by a combination of net funding costs, once-off transaction and restructure related costs and as the current costs of the head office.
Group operating expenses included head office-related costs of between R143 million compared to R142m in the prior year.
“The most significant cost categories within head office relate to payroll and staff-related expenses, lease and office-related costs as well as regulatory costs related to the audit and processes required to drive compliance as would be required in a listed environment,” said Ascendis.
The company said the target head office cost structure would be capped at 2.5 percent of the aggregate revenue of the remaining businesses.
“A head office restructure programme commenced in April this year aimed at significantly reducing the cost of the head office and aligning it to the new structure of the group.
“In line with this, a retrenchment process commenced in April.
“Further, the group gave notice to vacate its Bryanston head office in July next year,” said Ascendis.