Healthway shareholders approve S$60 million deal with Gateway
SINGAPORE — Shareholders of Healthway Medical Corp on Friday (April 21) overwhelmingly approved a S$60 million convertible notes deal with private equity firm Gateway Partners, allowing the clinic operator to stay afloat as well as fund expansion plans.
At an extraordinary general meeting held at The National University of Singapore Society’s Kent Ridge Guild House, 95.2 per cent of shareholders voted in favour of issuing the notes to Gateway, while 98 per cent voted in favour of a second resolution to approve the acquisition of Healthway Medical Enterprises.
Shareholders holding about 1.365 billion shares voted on Friday. Based on these numbers, Indonesia’s Lippo Group, which is making a voluntary conditional cash offer of S$0.042 a share to take over Healthway through its Gentle Care unit, is believed to have supported the resolutions. Gentle Care holds about 23.7 per cent of Catalist-listed Healthway as of Friday, well below the 50 per cent threshold for its offer to turn unconditional.
The EGM kicked off at 10.30am but it wasn’t until noon that voting commenced, as shareholders peppered the company with questions, including whether Gateway was investing in the company for the long term or just aiming to make a quick buck. They also asked if Healthway had considered Lippo’s offer and raised concerns over the company’s loans.
An investor who only wanted to be known as Mr S T Yeo told TODAY he voted in favour of the two resolutions even though he had reservations over the management team. “I have no choice. We have to do so for the future of the company,” said Mr Yeo, who has been invested in Healthway for 10 years. He currently holds shares in the company amounting to about S$50,000.
Another investor, who only wanted to be known as Angela, said: “I am also questioning whether if Gateway is here to make a bargain out of the shares. Some of my friends had lost money. They bought it when it was almost 20 cents and now it’s only about 4 cents. Everyone is losing money in this,” she said.
The conversion price of the notes translates to S$0.03384 per conversion share, representing a discount of 21.3 per cent from Friday’s last traded price of S$0.043 after trading was halted in the early afternoon. Gateway said it did not intend to make a general offer for Healthway.
Founded in 1990, Healthway now owns, operates and manages almost 100 medical centres and clinics in Singapore. It found itself in the spotlight in recent months after it failed to pay doctors and suppliers, while some of its clinics ran out of medication as it became mired in financial difficulties. It had to write off doubtful loans 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.
Last month, Healthway received about S$8.6 million in initial net proceeds from the first tranche of its convertible notes issuance to Gateway valued at S$10 million, allowing the clinic operator to pay arrears to its doctors, staff and suppliers.
Of the S$60 million in funds from the second tranche approved on Friday, Healthway plans to use about S$24 million to meet its short-term liquidity needs (given slow receivables collection, impending maturity of fixed-term borrowings, withdrawal of financial support from its creditors) and general working capital requirements, it said. The balance of S$36 million will be used for the organic expansion of GP clinics, acquisition of specialists’ clinics and paediatrics clinics, it said.
“Upon receipt of the proceeds from the proposed notes issue, the company will bolster its balance sheet, resulting in its short-term liquidity needs being met, outstanding debt being repaid with additional capital available for future growth,” Healthway said.