Debt repayment and growth opportunities will be the focus for fertility specialists Monash IVF Group (ASX: MVF) following an $80 million equity raise.
The raise should leave the company in a position to restart its business after the Australian Federal Government placed restrictions on non-urgent elective surgeries, which included IVF treatments, on 25 March.
Today those restrictions lift, meaning Monash can recommence its IVF procedures.
Monash says $77 million of the raise will go toward reducing debt, enabling the company to pursue organic and inorganic growth opportunities already identified in Australia and South East Asia.
As at 24 April Monash has a net debt position of approximately $94 million, including access to $20 million after drawing down on its $115 million syndicated debt facility.
Following the raise Monash IVF will have total liquidity of approximately $97 million.
The equity raise will come in two parts: a $39.8 million institutional placement and a $40.2 million 1-for-3.05 accelerated pro rata non-renounceable entitlement offer.
Institutional investors will be able to get in on the raise at $0.52 per share, representing a 26.8 per cent discount.
Monash's FY20 trading through to February and volumes through to 25 March were largely in line with previous guidance, but the company says its trading performance was materially impacted by restrictions on non-urgent elective surgeries.
From today the company is planning for a gradual return of patients, but the month without business will likely cause a significant dent considering the only part of the business that continued to operate during the shutdown was its ultrasound clinics. Overall Monash IVF says restrictions resulted in volumes for April 2020 down 70 per cent year on year.
Approximately $7 million of the equity raise will be deployed into specific growth initiatives including the opening of a new Sydney CBD flagship fertility clinic and joint venture, partnership and acquisition opportunities across South East Asia.
Monash IVF also plans to pursue longer term growth initiatives including transforming its Melbourne footprint and upgrading clinics.
"Monash IVF believes the support from the Equity Raising in addition to the cash preservation measures will provide the business with the balance sheet flexibility that is appropriate for the current uncertain macroeconomic environment and will assist the company to continue to execute a number of exciting growth initiatives," says Monash IVF CEO Michael Knaap.
"Monash IVF is poised to resume IVF treatment while prioritising the health and safety of our patients, doctors and employees."
Updated at 3:20pm AEST on 27 April 2020.
Get our daily business news
Sign up to our free email news updates.
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support