Singhe Hospitals to carry out private placement deal to repay loan

The board of directors of Singhe Hospitals PLC is to issue little over 33 million shares or 7.67 percent of the hospital firm to its Chairman/CEO A.M. Weerasighe via a private placement in lieu of a repayment of a loan Weerasinghe has granted to the company. 

Singhe Hospitals in a stock exchange filing on Monday said its director board had passed a resolution to this effect subject to the approval of the shareholders and the Colombo Stock Exchange (CSE).

The private placement will be carried out at Rs.2 per share amounting to a total of Rs.66.15 million “in lieu of repayment of the loan of Rs.50.65 million granted to the company by A.M. Weerasinghe with interest at AWPLR 1 percent thereon of Rs.15.5 million calculated up to August 31, 2018,” the filing said.
It also stated that the purpose of the private placement was to overcome the situation of serious capital loss experienced by the company, and there will be no additional funds coming into the company through the placement deal.

The current stated capital of the company is Rs.848.2 million.

Singhe Hospitals which runs a 50-bed hospital in Ratnapura has been losing money quarter-after-quarter since it went public in April 2015. 

The company raised Rs.250 million at its IPO by offering 100 million shares at Rs.2.50 each. But the share price stayed below the IPO price ever since. 

Singhe Hospitals’ share closed on Monday at Rs.1.30, down 10 cents.   

During the quarter ended June 30, 2018, the company was able to narrow its losses to Rs.2.4 million from Rs.12.5 million incurred for the same period last year. The revenue grew by 8 percent year-on-year to Rs.134.6 million.

 The company has borrowings of Rs.232 million and Rs.71 million under overdrafts, bringing the total owned to banks to about Rs.300 million.

The total equity of the company as at June 30, 2018 was Rs.424 million, which came down from Rs.426 million as at March 2018. 

The company has Rs.544 million as accumulated losses. 

With the accumulated losses eating into the equity, the company on August 30 said it was facing a situation of serious capital loss, and called for an Extraordinary General Meeting (EGM) to apprise the shareholders of the brewing situation. 

Singhe Hospitals Chairman/CEO A.M. Weerasinghe holds 74.67 percent stake in the hospital while high net worth investor, Dr. T. Senthilverl has 11.11 percent stake in the company. 

Singhe Hospitals, a Board of Investment-approved company began its operations in 2012. 

The company decided to go public after just two years in operation to retire debt and invest in machinery and labs on the promise of turning a profit of Rs.10 million in the following financial year.