Struggling pathology labs group Healius intends raising $187 million in fresh capital to help reduce the high debt levels troubling its banking syndicate after its pathology business was hit by a sharp decline in COVID-19 testing volumes.
Healius operates 2150 pathology testing sites and 148 imaging sites. It went into a trading halt on Monday and later in the day announced the heavily discounted 1-for-3.65 rights issue at a price of $1.20 per share. It will also not be paying any dividends to shareholders in 2023-24.
Healius CEO Maxine Jaquet said the company continued to reduce costs to make it a leaner business.
The shares closed at $1.835 on Friday. Two years ago, Healius shares were trading above $5.
John Wylie, founder of Tanarra Capital, which is a large shareholder, was scathing. “We regard this as a debacle on the part of the Healius board and management,” Mr Wylie said.
“A deeply discounted coercive equity issue at the bottom of the market should be the last option that a company considers in repairing its balance sheet, rather than the first.”
Healius is still defending itself against a takeover bid from Australian Clinical Labs, which offered 0.74 ACL shares for every 1 Healius share in March. It was rebuffed by the Healius board, but ACL refuses to give up and keeps extending the offer.
The Healius lending syndicate has agreed to waive a gearing covenant for the December half of 2023-24 and temporarily increase a covenant for the full year. Healius has also agreed to reduce its total banking facilities from $1 billion to $750 million and reduce its drawn debt by at least $150 million by June 30, 2024. Healius has also agreed to suspend dividend payments to shareholders in 2023-24, after last paying aRead more on afr.com