Medical tech firm Cochlear is seeking to eliminate liquidity risk by raising $800 million as the coronavirus pandemic delays elective surgeries across a growing number of countries.
The ASX-listed company on Wednesday joined the likes of Webjet, Seafarms Group, and oOh!Media in flagging capital raising measures as coronavirus disruptions threaten to eat into firms’ balance sheets.
Cochlear’s $140 per-share offer represents a 16.7 per cent discount to its last closing price of $168 on Tuesday.
The company’s shares have lost 25.2 per cent of their value in 2020 amid a more severe market downturn.
Australia’s battered indices have produced a steady stream of profit warnings this week – with an increasing number of workers stood-down – as businesses bunker down amid escalating COVID-19 quarantine measures.
An expanding list of businesses are being forced to close their doors at midnight on Wednesday following a fresh round of government restrictions, with an emphasis on stopping large gatherings.
Among the latest round of virus-related ASX company announcements on Wednesday was Viva Leisure, which has closed all its gyms and cancelled the casual shifts of 800 staff.
Non-essential permanent Viva staff have been placed on either paid or unpaid leave and redundancies have been offered for some permanent roles not required during the shutdown period.
Funeral operator Invocare also said it was implementing contingency plans now that funerals have been limited to 10 people.
It said it has live streaming and recording facilities at many of its locations.
Dominos Pizza’s will be closing its New Zealand stores in light of the country’s COVID-19 measures, while Wesfarmers will also shut its 25 Kmart outlets in NZ but will keep Bunnings open.
Virgin Australia has stood down about 8,000 of its 10,000 workers until at least the end of May and further slashed domestic flight capacity in the wake of the coronavirus border restrictions.
The Star Entertainment Group also stood down the bulk of its workforce on Wednesday with 8,100 workers suspended following the closure of its food, beverage, conferencing, and gaming facilities.
Meanwhie, Cochlear chairman Rick Holliday-Smith said the company has embarked on a “non-negotiable” mission to eliminate liquidity risk.
The combination of COVID-19, and the likely increase in debt from the adverse judgment in a long-running legal case, is expected to push debt above the board’s comfort levels, he said.
“Cochlear’s implant recipients rely on the company for support throughout their lifetime which makes eliminating liquidity risk non-negotiable,” the company said in a release.
The firm on Wednesday announced it will also embark on a non-underwritten share purchase plan to raise up to $50 million.
It has also secured a credit approved commitment for an additional $150 million from an existing lender.
Cochlear will maintain its workforce and will continue to invest in research and development, but will suspend its dividend until trading conditions improve following payment of the 1H20 dividend on April 17.