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Category 1 Transaction Announcement relating to the Proposed Disposal of RCA
Ascendis Health Limited
(Incorporated in the Republic of South Africa)
(Registration number 2008/005856/06)
JSE Share Code: ASC
ISIN: ZAE000185005
(“Ascendis Health” or the “Company” or “the Group”)
CATEGORY 1 TRANSACTION ANNOUNCEMENT RELATING TO THE PROPOSED DISPOSAL OF RCA
1. INTRODUCTION
Shareholders of Ascendis Health (“ASC Shareholders”) are referred to the announcement published on
12 May 2021 regarding a proposed transaction for the recapitalisation of Ascendis Health (“the Group
Recapitalisation”) (“the Group Recapitalisation Announcement”), which referred to the potential
disposal of non-core assets and Respiratory Care Africa Proprietary Limited (“RCA”). In line with this
strategy, ASC Shareholders are advised that a sale of shares agreement (“SPA”) has been concluded
between Surgical Innovations Proprietary Limited (“the Seller”) (a wholly-owned subsidiary of Ascendis
Health), RCA (a wholly-owned subsidiary of the Seller) and K2021519417 (South Africa) Proprietary
Limited, indirectly owned by the Ata Fund III Partnership, an en commandite partnership managed by Ata
Capital Proprietary Limited (“Ata”) and the current management of RCA (“the Purchaser”), for the disposal
of all the shares in RCA (the “Sale Shares”) (“the Disposal”). The Disposal is subject to the fulfilment of
the conditions precedent detailed in paragraph 4.3 below.
2. NATURE OF THE RCA BUSINESS
RCA is a supplier of respiratory, monitoring, radiology and other medical equipment and consumables
used in the treatment of patients at hospitals (with a focus in high care, ICU, operating theatre and
maternity wards) and in the home. It also provides technical support and services in relation to the medical
equipment it supplies.
RCA has been instrumental in the fight against COVID-19 in having been a leading supplier of ventilators
and high-flow nasal oxygen equipment (and associated consumables) into both public and private
hospitals since the onset of COVID-19 last year.
3. RATIONALE FOR THE DISPOSAL
The Company’s board of directors (“the Board”) has previously communicated its commitment to reduce
the Group’s unsustainable debt levels. The Disposal is in line with the Group Recapitalisation. RCA has
performed strongly through COVID, selling significant quantities of equipment into the market and it is
anticipated that trading will normalise once COVID has subsided. Ascendis Health believes that current
trading provides a sound foundation for the Disposal.
4. SALIENT TERMS OF THE DISPOSAL
4.1. Purchase Consideration
4.1.1 With effect from the Closing Date (defined in paragraph 4.4 below), the Seller will sell the Sale
Shares to the Purchaser for cash consideration equal to R 450,000,000 (four hundred and fifty
million Rand) which will be adjusted for any surplus (or shortfall) in net working capital in excess
of (or below) R 160,000,000 (one hundred and sixty million Rand) and any net debt assumed by
the Purchaser on the Closing Date (“Purchase Consideration”).
4.1.2. The Purchaser will fund the Purchase Consideration using the proceeds of finance provided to it
by Ata and Absa Bank Limited (“Absa”).
4.1.3. Notwithstanding the signature date of the SPA, all risk, benefit and ownership of the Sale Shares
will pass to the Purchaser with effect from the Closing Date.
4.2. Use of Proceeds
As detailed in paragraph 3 above, Ascendis Health will use the net proceeds of the Disposal to reduce the
Group’s debt as was explained in the Group Recapitalisation Announcement.
4.3 Conditions Precedent
The Disposal is subject to the fulfilment or waiver (to the extent permissible) of the conditions precedent
contained in the SPA, including:
4.3.1 ASC Shareholders approving the ‘category 1’ ordinary resolution if required in terms of section 9
of the JSE Limited (“JSE”) Listings Requirements;
4.3.2 the finance being provided by Ata to the Purchaser to fund the Purchase Consideration shall be
paid into an escrow account and held in such account until implementation of the Disposal;
4.3.3 the funding agreement in relation to the Absa acquisition funding becoming unconditional;
4.3.4 approval and/or notification being given by or to the South African Health Products Regulatory
Authority (“SAHPRA”) and other relevant suppliers, to the extent required;
4.3.5 the approval of the relevant competition and regulatory authorities in relation to the Disposal.
4.4 Closing Date
The Disposal will be implemented on the Closing Date, which is expected to take place in the third quarter
of the 2021 calendar year. The Closing Date shall be determined as the last business day of the calendar
month in which the last condition precedent is fulfilled or waived or if the last business day of such
calendar month is less than five business days after all of the conditions precedent have been fulfilled or
waived, as the case may be, the Closing Date shall be the last business day of the following calendar month
(“Closing Date”).
4.5 Other Significant Terms
The SPA contains certain representations and warranties which are standard for a transaction of this
nature. A transitional services arrangement has also been executed to ensure continuity in the operation
of RCA post the Closing Date, for a limited period.
5. FINANCIAL INFORMATION
5.1 Net Asset Value (NAV)
The net asset / (liability) value of RCA as at 31 December 2020, being the date of the last unaudited
(six-month interim) financial information of RCA, was (R 1,308,000,765) (Note 1 and 2).
5.2 Profit After Tax
• The unaudited profit after tax attributable to RCA for the six months ended 31 December 2020 was
R 53,620,108 (Note 1).
• The unaudited loss after tax attributable to RCA for the twelve months ended 30 June 2020 was
R 868,161,825 (Note 1 and 3).
• The audited loss after tax attributable to RCA for the twelve months ended 30 June 2019 was
R 596,001,858 (Note 1 and 4).
5.3 EBITDAPM
• The unaudited EBITDAPM attributable to RCA for the six months ended 31 December 2020 was
R 143,845,927 (Note 1).
• The unaudited EBITDAPM attributable to RCA for the twelve months ended 30 June 2020 contributed
a loss of R 776,929,395 (Note 1 and 3).
• The unaudited EBITDAPM attributable to RCA for the twelve months ended 30 June 2019 contributed
a loss of R 533,239,986 (Note 1 and 4).
Notes on Financial information:
1) As a stand-alone entity, not consolidated with its subsidiaries, as the subsidiaries do not form part
of the disposal package. Management is satisfied with the quality of the unaudited financial
information of RCA.
2) The net liabilities value includes a financial guarantee liability in respect of the Ascendis Health
Group’s senior debt of (R 1,402,429,932), shareholder loans of (R 552,347,515) and an investment
in subsidiaries asset of R 328,962,460. RCA will be released from this financial guarantee liability
and the shareholder loans will be capitalised prior to the Disposal. The investment in subsidiaries
asset will not form part of the disposal of RCA, thus remaining as part of the Ascendis Health Group.
3) Attributing to the loss after tax and EBITDAPM for the twelve months ended 30 June 2020 is a
remeasurement of financial guarantee liability expense of R 832,383,059 and provision for
intercompany expected credit losses (ECL) expense of R 14,266,150, which are intra-group
transactions eliminated at an Ascendis Health Group level.
4) Attributing to the loss after tax and EBITDAPM for the twelve months ended 30 June 2019 is a
remeasurement of financial guarantee liability expense of R 570,046,873 and provision for
intercompany ECL expense of R 5,191,168, which are intra-group transactions eliminated at an
Ascendis Health Group level.
PM) Shareholders are advised that EBITDA is a Performance Measure (PM) and is not a term defined by
International Financial Reporting Standards (IFRS) and may accordingly differ from company to
company. EBITDA has been calculated consistently with Ascendis Health’s methodology for the
calculation of EBITDA as set out on the Company’s website:
https://ascendishealth.com/wp-content/uploads/2020/02/Ascendis-Health-Performance-
Measures-Jan-2020.pdf
The Profit After Tax and Net Asset/(Liability) value was calculated in accordance with International
Financial Reporting Standards. The pro forma financial effects of the Disposal will be detailed in the
Circular (referred to in paragraph 7 below).
6. CLASSIFICATION OF THE DISPOSAL
The Disposal meets the definition of a category 1 transaction as contemplated in the JSE Listings
Requirements. As a result, the Disposal is required to be approved by an ordinary resolution of ASC
Shareholders, which will require the support of more than 50% (fifty per cent) of the votes exercised
thereon.
7. CIRCULAR
A circular setting out additional details of the Disposal (“the Circular”) will be distributed to ASC
Shareholders in due course. Further details of the Disposal, together with, inter alia, the pro-forma
financial effects of the Disposal, will be included in the Circular. This Circular will incorporate a notice
convening a general meeting of the ASC Shareholders (“General Meeting”) at which ASC Shareholders will
be requested to vote on the relevant resolutions. At the same time, the salient dates and times of the
Disposal, including the date of the General Meeting, will be announced on SENS.
8. REFERRAL TO RENEWAL OF CAUTIONARY ANNOUNCEMENT
ASC Shareholders are referred to the Group Recapitalisation Announcement and are advised to continue
to exercise caution when trading in their Ascendis Health shares until a further announcement is made.
26 May 2021
Bryanston
Financial Advisor to Ascendis Health Legal Advisor to Ascendis Heath
Rothschild & Co South Africa Edward Nathan Sonnenbergs
Incorporated
Financial Advisor to the Purchaser Legal Advisor to the Purchaser
Sapila Capital Proprietary Limited Falcon & Hume Inc Attorneys
Transaction Sponsor and Regulatory
Advisor
Questco Corporate Advisory Proprietary
Date: 26-05-2021 04:22:00
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