Ascendis investor Coast2Coast works to end forced share sales
Coast2Coast has been offloading Ascendis shares in recent weeks to meet obligations to lenders
Ascendis Health’s anchor investor, private equity firm Coast2Coast, says it is working on measures to shore up liquidity and put an end to its forced sales of the healthcare company’s stock.
To meet obligations to lenders, Coast2Coast has been a heavy seller of Ascendis shares in recent weeks. The sales, to meet margin calls and to partly settle convertible debt instruments, have contributed to a precipitous share price decline.
Ascendis’s shares closed at R3.50 on Wednesday, an 83% decline since Coast2Coast paid R20 a share during a rights offer just a year ago.
“Coast2Coast has initiated a number of projects, some of which are well progressed, which will provide additional liquidity ... at which point we expect to see an end to the current overhang on the Ascendis share,” said Coast2Coast CEO Gary Shayne, who is also an Ascendis board member.
Coast2Coast also owns majority stakes in consumer goods companies Bounty Brands and Marlin Brands. It has been forced to rely on those assets to support its shrinking investment in Ascendis.
Shayne said Coast2Coast was considering a partial sale of Bounty Brands to a private investment company.
It would also consider listing the business on the JSE “within the next two years”, after an earlier plan to do so was shelved.
Bounty Brands, 75% owned by Coast2Coast, owns the Serena range of Mediterranean food products and refuse-bag maker Tuffy, and holds licences to international apparel brands such as Levi’s.
Bounty Brands has received equity injections worth more than R1.7bn over the past two years. It has used the funding to lift organic growth and for acquisitions, and now generates about 40% of its earnings outside of SA.
Independent analyst Anthony Clark said it would be difficult for Coast2Coast to get a decent price for Bounty Brands as “it’s not a seller’s market”.
But at the same time, questions remained as to whether Coast2Coast would have sufficient liquidity to hold out for a listing of that business, Clark said.
Meanwhile, Shayne refuted market speculation that Coast2Coast was being pushed into business rescue — a process aimed at rehabilitating financially distressed companies.
A spokesperson for the Companies and Intellectual Property Commission told Business Day that Coast2Coast had not filed for business rescue.
Shayne said Coast2Coast, which listed Ascendis in 2013, planned to hang on to its investment in the company over the long term.
The private equity group had committed capital of R5.2bn in 2017, according to the Southern African Venture Capital and Private Equity Association.