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- Cochlear (COH) will raise $850 million to cushion the “significant negative impact” from COVID-19
- A total of $800 million will be raised through a placement, while the remaining $50 million will be through a share purchase plan
- Approximately 5.7 million shares will be issued in the placement at a price of $140 per share
- Following the completion of the placement, shareholders have the opportunity to apply for up to $30,000 worth of new shares
- The money raised will be used to enhance the company’s balance sheet and support the business during this uncertain time
- Cochlear is steady today and shares are trading for $168 each
Cochlear (COH) will raise $850 million to cushion the “significant negative impact” from COVID-19.
A total of $800 million will be raised through a fully underwritten institutional placement while the remaining $50 million will be raised through a non-underwritten share purchase plan (SPP).
The placement will be conducted at $140 per share, which represents a 16.7 per cent discount to the last closing price of $168 on March 24.
A total of 5.7 million new shares will be issued, representing approximately 9.9 per cent of Cochlear’s existing issued capital.
These shares are expected to settle on March 30 and be issued and begin trading on the ASX on March 31.
Following the completion of the placement, Cochlear will offer existing eligible shareholders the opportunity to participate in a non-underwritten SPP to raise up to $50 million.
Shareholders will have the opportunity to apply for up to $30,000 worth of new shares.
While the price for the SPP is not yet known it will be less than the placement price and will be a two per cent discount to the five-day, volume-weighted average price (VWAP) up to, and including, the closing date on April 23.
However, Cochlear has the right to accept more, or less, applications for the SPP, raising more or less than the $50 million.
The hearing implant maker expects COVID-19 to cause significant business disruption as elective surgeries are pushed back across a growing number of countries.
As well as this disruption, Cochlear must pay US$268 million to the Alfred E. Mann Foundation for Scientific Research (AMF) when the company was found guilty of infringing on AMF patients.
The money raised will be used to enhance Cochlear’s balance sheet, support the business during this uncertain time, and reinforce its position as the leader in hearing solutions.
“While Cochlear commenced the year with a strong balance sheet and conservative gearing levels, the expected impact of COVID-19 on sales, combined with the likely cost of an adverse judgment in a long-running litigation case, is expected to lift hearing to a level that the Board is not comfortable with,” Chairman Rick Holliday-Smith said.
“To ensure we emerge from this global health pandemic in an even stronger competitive position than before, we are strengthening the balance sheet by raising equity,” he added.
Cochlear shares are steady today and trading for $168 each at 2:26 pm AEDT.
