Solal owner inks deal with new lender, avoids immediate payment of R550 million loan

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Wellness group Ascendis has signed a new loan agreement with  Austell Pharmaceuticals.
Wellness group Ascendis has signed a new loan agreement with Austell Pharmaceuticals.
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Ascendis Health has avoided having to immediately pay its lenders R550 million by concluding a new loan agreement with Austell Pharmaceuticals, a South African company.

Recently, lenders Apex Management services and Pharma-Q Holdings sent Ascendis a notice that the R550 million loan it advanced Ascendis on 1 February was due immediately, with interest.

The notice followed Ascendis' appointments of Carl Neethling, Amaresh Chetty and Bharti Harie as its new new non-executive directors at a special general meeting last week.

The move wasn’t approved by the lenders as per the terms of the loan agreement.

In a statement, Ascendis chairperson Harry Smit said the Austell loan meant the wellness group no longer faced an immediate enforcement action threat from the lenders. The new loan is also more favourable than the previous one since it requires no raising fees. 

"The terms of the new loan reduces our cost of borrowings significantly in the short term, particularly given the interest rate ratchet that was applied to our previous loan on 11 May 2022, and will result in an interest saving of approximately R3.6 million to the end of June," Smit said on Tuesday.

By selling some of its assets, Ascendis cut down its debt burden from R6.7 billion to R582 million by December 2021. 

The group is selling its Ascendis Pharma, Ascendis Medical, and Nimue businesses to settle R550 million in debt. Ascendis Health owns the Solal brand.

The wellness company said it the transactions will not be "materially altered" by the new loan facility. 

"In terms of the loan agreement with Austell, should the disposal of Ascendis Pharma to the current buyers not be concluded or approved by shareholders, Ascendis will enter into an agreement to dispose of the business to Austell. Austell has already submitted a compelling written offer to acquire Ascendis Pharma," the group said.

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