ACQUISITIVE healthcare conglomerate Ascendis has taken steps to reinforce its existing black empowerment credentials.
The company announced on Thursday that it would shift its empowerment shareholding from 7% to about 15% in the medium term after a R140m convertible debenture issue to WDB Investment Holdings and Senatla Capital.
While the deal more than doubles black economic empowerment (BEE) participation, Ascendis CEO Karsten Wellner stressed that the company intended to grow its broad-based economic empowerment structure even more with “further deals of similar size and structure in the near future”.
This deal follows empowerment initiatives earlier this year, involving MIC Investment Holdings and a direct investment by WDB. The collective empowerment buy-in totals R390m.
Ascendis, which listed last year, does not yet have a large following among analysts. But the handful of market sources tracking the company’s progress broadly agreed that stronger BEE credentials were essential as Ascendis would be looking for more business in the public healthcare sector after acquiring three sizeable medical devices businesses.
The key to the latest empowerment deal is that there is no dilution for existing Ascendis shareholders.
The deal was structured through the issuing of shares at Coast2Coast (C2C) – the majority shareholder in Ascendis – rather than a fresh issue of shares.
The mechanics of the debenture-based deal are interesting as the BEE companies hold different coupon rates and different conversion rate discounts.
Essentially Gane Holdings — in which C2C founders Gary Shayne and Cris Dillon have an indirect beneficial controlling interest — has issued WDB a fixed 13% coupon convertible debenture at a face value of R100m and Senatla a fixed 11.5% coupon convertible debenture at a face value of R40m. Both are convertible into Ascendis shares owned by Gane Holdings in three annual tranches.
Dr Wellner said that while the coupon rates were different, the conversion arrangements offered different discounts. “We have the feeling both deals will come out on roughly the same terms.”
