Karsten Wellner. Picture: TREVOR SAMSON
Karsten Wellner. Picture: TREVOR SAMSON

Ascendis Health’s little-supported rights offer is a boon to its major shareholder and founder Coast 2 Coast (C2C), if CEO Karsten Wellner is to be believed.

C2C took up almost all the 37.5-million new shares offered in the pharmaceutical company’s R750m cash call. At R20, it was pitched at a 4.6% premium to the stock’s 30-day trading average when it was launched in November.

The share price lost 5.14% on Monday to close at R14.22 and based on this, C2C paid a premium of about 40%.

Wellner said C2C’s plan was to "underwrite the whole amount with the intention not to dilute existing shareholders
too much and to pick up a considerable amount of shares, which they would not be able to do on the open market due to low liquidity".

The company plans to use the funds to cut vendor liabilities for its chunky Remedica deal, as well as to reduce overall debt.

"C2C might have been able to pick up the shares slightly cheaper, but a rights issue does not happen over night."

According to the rights offer results released on Monday, just 0.4% of its shareholders took up their rights, leaving the bulk — 37.34-million shares — to C2C. That moves C2C’s stake to about 10.3% from 3.85% before the offer was announced.

In their own capacity, C2C directors Gary Shayne and Crispian Dillon — who serve on the Ascendis board as nonexecutives, have also increased their individual holdings. But their buying has done little to support Ascendis stock, which has suffered a one-way slide in 2017 after peaking at almost R29 in September 2016.

Some analysts are concerned that Ascendis will suffer indigestion after three years of nonstop acquisitions.

But in an interview with Business Day in November, Wellner said: "We have never bought a business which was not headline earnings per share accretive from day one".


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