Ramsay Health Care (ASX: RHC) has announced a $1.4 billion capital raising. Should you buy into it?
What is Ramsay?
Ramsay is the largest private hospital operator in Australia, Scandinavia and France. It also has a major presence in the UK. It has been operating for more than 50 years, having been started by Paul Ramsay AO in 1964. It has nearly 500 facilities across 11 countries with more than 75,000 staff, annually treating around 8.5 million patients.
Ramsay’s capital raising
The giant private hospital operator has announced a $1.4 billion capital raising comprising a $1.2 billion underwritten institutional placement and up to an additional $200 million via a non-underwritten share purchase plan (SPP).
Why is Ramsay doing a capital raising?
The COVID-19 pandemic has resulted in the suspension of most elective surgery in each of Ramsay’s major operating geographies and led to an uncertain operating environment.
It’s doing the capital raising to enhance financial flexibility during the pandemic.
What else did Ramsay announce?
It said that it has received consent to amend or waive key banking covenants from lenders up to and including the December 2020 testing date and it will temporarily suspend the ordinary dividend.
What is the capital raising price?
The placement price is being done at a share price of $56, which represents a 12.9% discount to the last closing price.
The new shares being issued represent around 10.6% of Ramsay’s existing issued ordinary shares.
Is Ramsay a buy?
It’s disappointing that Ramsay has had to do a capital raising. But these capital raisings often prove to be some of the best times to buy shares. It could be worth buying Ramsay, but there could be better opportunities for your money like these tech shares:
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Disclosure: at the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.
