Life Healthcare to Fund Alliance Deal With $756 Million Offer

  • Rights issue to cut net debt to ‘appropriate’ level of gearing
  • S. African hospital company sees restoration of credit rating

Life Healthcare Group Holdings Ltd. plans to raise as much as 10.7 billion rand ($756 million) through a rights issue as the the South African company seeks to reduce debt after it expanded into the U.K. market.

The fully underwritten offer will cut Life Healthcare’s debt to “the appropriate level of gearing for the company to restore its investment grade credit rating,”  the Johannesburg-based owner of private hospitals said in a statement on Tuesday. The funds will also enable the company to pursue a capital investment program and pay dividends, it said.

Life Healthcare agreed in November to buy Alliance Medical Group Ltd. of the U.K. for as much as 800 million pounds ($990 million) including debt as the South African company follows larger competitors into that market. The rights offer will refinance a portion of the bridge facility that Life Healthcare extended to secure the deal and take care of financing costs linked to the Alliance acquisition.

The offer is subject to shareholder approval at the company’s annual general meeting on Jan. 25, with details to be announced after that date, it said.

The shares rose 1.2 percent to 32.06 rand as of 12:14 p.m. in Johannesburg.

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