New Zealand pharmacy products group Ebos said it has raised $175 million from a discounted placement to institutions, which is $25 million more than what it initially sought.
The company announced earlier this week that it was going to launch a $150 million equity raising through UBS New Zealand to pay off debt and fund future acquisitions.
The raise was by way of an underwritten placement. It involved 7.7 million securities or about 5 per cent of the Ebos market value. UBS was the sole lead manager and underwriter for the placement.
Shares were sold at $19.70, an 8 per cent discount to the company’s last traded price on NZX on April 29.
Trading in Ebos shares was suspended while the placement of the shares was completed. It resumed yesterday.
Company chair Mark Waller said the issue was increased to accommodate strong demand from both existing and new institutional investors in New Zealand, Australia and offshore, according to a news report on Scoop.
According to Waller, their strategy had clearly resonated with investors.
“We look forward to continuing to successfully grow both our healthcare and animal care segments to create further shareholder value,” he said in a statement.
Following the placement, the company’s pro-forma net debt-to-EBITDA (earnings before interest, tax, depreciation and amortisation) ratio will fall to 1.51 times on December 31 from 2.16 times.
The proceeds will provide the company with enhanced financial capacity for further strategic acquisitions and organic growth initiatives to continue the long-term growth of the group, Ebos’ chief executive John Cullity said.
Scoop reported when the placement was announced yesterday, Cullity had said Ebos was considering a number of bolt-on acquisitions to both its healthcare and animal care operations, including healthcare consumer brands, medical devices and pharmacy sector expansion.
The statement from Ebos didn’t say why underwriting was necessary or how much UBS charged.
A separate Scoop article reported outgoing New Zealand Shareholders’ Association chair John Hawkins criticised the move, saying, “Ebos’ board and managers should hang their heads in shame for cutting retail shareholders out of its discounted capital raising, which clearly wasn’t urgent.”
Hawkins said the issue dilutes retail shareholders’ holdings and shows the company’s board and managers are “slow learners” for treating retailers so badly.
“The issue, which was discounted 8 percent below the market price, was a free gift to a few privileged larger organisations at the expense of many smaller investors who would have their holdings diluted as a result,” he says, and added the fact that demand was so strong that Ebos increased the amount raised from $150 million to $175 million “just adds insult to injury.”
Among Ebos’ well-known brands are the Animates pet care chain, Red Seal supplements, Black Hawk pet food, and the Terry White pharmacy chain in Australia.
It has previously said it wants to expand exports into the Asian region, notably China.
