Healthway gets S$8.6m to pay doctors, suppliers

SINGAPORE — Healthway Medical Corp has received about S$8.6 million in funds from the first tranche of a convertible notes issue, allowing the debt-ridden clinic operator to pay arrears to its doctors, staff and suppliers by the end of the month.

Healthway, which runs Singapore’s largest chain of private clinics, said in a statement on Monday (March 27), it had received the initial net proceeds from the first tranche of its convertible notes issuance to Singapore-based private equity firm Gateway Partners valued at S$10 million.

Catalist-listed Healthway last week announced that it will issue convertible notes to Gateway for an aggregate principal amount of S$70 million in two tranches.

The issue of the second tranche comprising a principal amount of S$60 million is subject to shareholders’ approval at an extraordinary general meeting to be held by April 21.

Under the first tranche of the convertible notes issue, up to 295,508,274 conversion shares will be issued at a price of S$0.03384 each, representing a discount of 21.3 per cent from Friday’s closing price of S$0.043.

After deducting the upfront fee of S$1.4 million, Healthway received S$8.6 million from Gateway.

“Healthway will use the proceeds to fund immediate operational needs, including the settlement of salaries and other requirements. The proceeds will also support the restoration of normal payment schedules to its doctors and suppliers,” it said.

The convertible bonds carry no coupon and are redeemable at maturity at 100 per cent of the principal amount, plus a cash redemption premium payable upon maturity. If a default occurs, Gateway will receive 6 per cent of the internal rate of return on its principal, for the periods from the respective issue dates of both note tranches.

Founded in 1990, Healthway now owns, operates and manages almost 100 medical centres and clinics in Singapore. Recently, it became mired in financial difficulties after it wrote off doubtful loans made to an incubator of medical clinics in Singapore as well as to medical centres in China owned by an unrelated third party and managed by the group. As a result, Healthway was unable to pay its doctors and suppliers, leading to some of its clinics running out of medication.

Following Monday's announcement, Healthway shares fell 0.1 cent, or 2.3 per cent, to close at S$0.042 each, giving it a market capitalisation of about S$103.3 million.