Ascendis, the embattled health stock that went through multiple leadership changes, is finally debt free after its borrowings that once hit nearly R8bn almost led to its collapse.
The owner of Solal, Vitaforce and Bettaway supplements said in a trading statement on Thursday that the payment of the last tranche of its debt signalled “the end to what has been an immensely challenging period of divestments and restructuring for all stakeholders”.
However, it is still loss-making. It expects a headline earnings loss for the six-month period to December 2022 of between 26.5c to 32.3c a share, representing an improvement of 72.1%-77.2% compared with the restated headline loss per share of 115.9c in the prior period.
“In the near term, the group continues to face certain legacy challenges arising from this tumultuous period, but significant progress has been made in salvaging value for shareholders,” it said in a statement.
The company, which listed on the JSE in 2013, undertook a series of acquisitions in Europe in 2015 and 2016 that ended up stretching its balance sheet to the limit.
In September 2021, it concluded a debt-for-asset swap with London-based lenders that walked away with some of Ascendis’s profitable offshore operations including the cash-generative Cyprus-based Remedica business in exchange for settling the bulk of its €444m (almost R7.8bn) debt.
It had multiple board changes in 2021, with the London-based lenders calling in outstanding debt days before Christmas that year after a board change, which forced it to find new funding to stay afloat within weeks.
By December 2021, Ascendis was valued at R357m on the JSE and had a debt pile of R582m.
Since June 2021, it has sold its Ascendis Skin and Body business that included the Nimue brand and its 49% stake in Spanish drug company Farmalider, as well as the Respiratory Care Africa and Animal Health businesses. These sales generated a profit of more than R1bn.
It was set to sell its medical device business in 2022, but the division was kept inside the business by the new board that included current acting CEO Carl Neethling.
Neethling joined the board in May 2022, forcing out two of the previous directors and enabling them to stop the planned sale of the device business as he said it had significantly more value than reflected in the offer price.
In 2022, Ascendis and Neethling also had renegotiated a better price for the sale of its pharmaceutical business to Austell for R437m. It was previously offered R375m by a consortium of PharmaQ and Imperial for the pharma business.
The company that managed to survive is left with the device and consumer brands businesses that includes supplements and vitamins.
In the statement it said: “Management remains confident and committed to the ongoing interventions being undertaken to ensure that shareholders realise maximum value over the long term”.
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