Mediclinic surges on debt refinancing

CAPE TOWN — Taking advantage of record-low interest rates, private hospital group MediClinic International announced yesterday that it had refinanced its entire R28bn debt facility.

MediClinic is SA’s thirdbiggest hospital group, with businesses in SA, Dubai and Switzerland. MediClinic aimed to raise R5bn with a rights issue underwritten by Remgro and had renegotiated its R24.1bn debt facilities in SA and Switzerland to realise an annual saving of R550m on financing costs, it said. Shares in the company jumped as much as 7.5% to an intraday high of R43.05 after the announcement.

“We are looking at expanding our existing platforms — getting new licences and new hospitals — as we believe there are many opportunities in existing territories. The new capital structure will enable us to move quickly as opportunities arise,” said MediClinic CEO Danie Meintjies.

Chairman Edwin Hertzog said the group was doing “very nicely” in Dubai, and planned to extend its footprint there.

It was pleased with its latest acquisitions in Switzerland, and in SA its new Cape Gate hospital had been performing better than expected. “But that doesn’t mean we don’t keep our eyes and ears open,” he said.

Its Swiss debt would have matured in October 2014, but the board of directors decided to raise equity and refinance debt to take advantage of SA’s favourable equity market and low interest rates in Switzerland.

The existing R24.4bn Swiss debt is to be refinanced through debt facilities raised in Switzerland and Luxembourg of R17.4bn, cash resources currently held offshore, and R11.2bn raised in SA. The cost of the new Swiss debt is expected to be 2.5%, less than half the current cost of the company’s debt, which stands at 5.6%.

In terms of the rights offer, 174,641,984 new MediClinic shares will be offered at R28.63 per share, in the ratio of 26.8 new MediClinic shares for every 100 MediClinic shares held on the day of the rights offer. The offer price is a 25% discount on the 30-day volume weighted average share price of R38.17 on Tuesday.

Jean Pierre Verster, an analyst with 36One Asset Management, speculated that Remgro might increase its shareholding if the offer was undersubscribed.

Dr Hertzog said it was unlikely this would be the case, as previous rights issues by MediClinic had been oversubscribed.