COMPANY COMMENT
Lesson from Ascendis Health: Don’t borrow against equity
Mainstay investor Coast2Coast has been forced to offload huge chunks of shares to meet obligations to lenders
Ascendis Health, which is now trading at an all-time low, provides a stark warning about the dangers of borrowing against equity. The company’s news feed on the JSE is littered with “dealings in securities” statements in which it says mainstay investor Coast2Coast has been forced to offload huge chunks of the company’s shares to meet obligations to lenders. For Coast2Coast, which has board representation at Ascendis, it is not a pretty picture at all. A year ago, Coast2Coast forked out more than R700m to buy 37-million newly issued Ascendis shares at R20 a piece. Now, the stock is trading at a paltry R3.26. Unfortunately, Ascendis’s other shareholders are being forced to share in the pain, as Coast2Coast’s forced sales continue to drive the share lower. Top market commentators have become increasingly critical of directors and investors who hold geared positions in their own stock. Wayne McCurrie tweeted last week that Coast2Coast’s sales reflect “the danger of borrowing against eq...
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