Ascendis Health, which has over the past two years fought off extreme financial difficulties, told its embattled shareholders yesterday it was investigating a delisting as the next step in a strategy to unlock value and return capital to shareholders, but just not to expect much of a premium on the share price.
The share price fell 2.9% to 67 cents yesterday afternoon. In line with the financial crisis at the wellness chemicals and products company, the share price has fallen from as much as R10.25 per share five years ago.
The company said in a notice yesterday it had entered into discussions with a consortium led by ACN Capital IHC, which is owned and controlled by Carl Neethling, who is also the CEO of Ascendis.
Neethling was appointed to Ascendis’ board in May last year and became its acting CEO in September, ostensibly with the aim of restoring Ascendis back to financial health.
“No offer has been made by ACN Capital at this stage and there is no certainty or guarantee that an offer would be made or received in due course,” Ascendis said.
However, it said that “if any offer is made by ACN Capital, it is not expected to be at a significant premium to the current traded price of Ascendis shares of 69 cents as at the date of this announcement.”
Neethling, through ACN Capital, has also been acquiring Ascendis’ shares on the open market over the past 12 months, as has non-executive director Theunis de Bruyn.
For instance, on June 30, Ascendis said in a JSE regulatory notice that Neethling had bought shares worth R218 179.86 at 62 cents each, while over a 12-month period, one of his biggest buys was R3.9 million of shares at 65 cents each.
Typically share purchases by directors send a positive signal to shareholders as it indicates the directors are confident about the company’s long-term prospects, and it is not often the purchases signal an intent to take over the whole company.
Ascendis has spent the last few years trying to escape rising debt that arose from a period of offshore expansion, and there have been surprise board shake-ups and appointments, substantial restructurings and the sale of many of its subsidiary companies.
Yesterday, the company’s directors said a delisting was a “key element” that would allow the company to generate “a more expeditious return of capital to Ascendis shareholders.”
The announcement follows hard on heels of Monday’s trading statement by the company, which said that for the year to June 30, the loss per share from continuing operations would be between 42.5 cents and 51.9 cents, an improvement of between 73.1% and 67.1% compared to the restated loss per share of 158.2 cents reported at the same time last year.
The headline loss per share from continuing operations was expected to be between 37.4 cents and 45.7 cents per share, an improvement of between 69.5% and 62.7%.
The overall headline loss per share would be between 35.7 cents and 43.6 cents, representing an improvement of between 55.8% and 46% over the same period a year before. The company expects to publish its annual results on Friday.
In May the company told shareholders it again faced more headwinds, after tax woes forced a subsidiary, Surgical Innovations, into voluntary business rescue.
The group had raised a R67 million provision to cover its potential liability of its Surgical Innovations business, which distributes surgical and acute care medical equipment and consumables. The group said at the time despite a formal objection it had been found liable for the full amount, which was payable “short order”.
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