Debt-ridden Healthway Medical gets S$70m lifeline

SINGAPORE — Cash-strapped Healthway Medical Corp (HMC) has accepted a S$70-million lifeline after it agreed to a convertible bonds deal, and doctors — who have been owed a month’s salaries — told TODAY they were informed on Thursday (March 23) by the company that they will be fully paid by the end of the month.

Under the deal with Cayman-based private equity firm Gateway, HMC will receive a first tranche of S$10 million “on or after” Saturday (March 25) to “fulfil its immediate liquidity needs”, which include settling its arrears with employees and suppliers.

The remaining S$60 million will be disbursed only after HMC receives the green light from its shareholders to issue convertible bonds.

The private clinic chain will hold an extraordinary general meeting by April 21 to seek their approval.

The agreement came days after HMC said it was considering another proposal for interim financing from Lippo China Resources, a unit of Indonesia’s Lippo Group, which holds a 21.9 per cent stake in HMC.

In a Singapore Exchange filing on Monday, the HMC board said that it was reviewing the terms for a S$10 million loan from Lippo for 12 months to pay doctors and nurses only.

HMC’s chairman Khoo Yee Hoe said on Thursday that the board and management had discussed extensively all the options presented to the company before sealing the agreement with Gateway.

Under the deal, 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 tranches of money.

HMC’s current woes stem from questionable loans which have led the company to be saddled with debts.

As a result, it is unable to pay both doctors and suppliers, which have led to some of its clinics running out of medication.

With the S$10 million set to be issued, HMC’s president Veronica Chan said that the priority is “to ensure that our doctors and staff receive their salaries, that our operational issues are resolved, and to continue to take care of our patients”.

A doctor with HMC, who had received an update on the situation from the management, said that salaries which have yet to be paid to doctors will be settled by the end of this month. A previous memo sent by the management had said that the unpaid salaries could only be cleared in May.

The doctor, who did not want to be named, added that things had also “pretty much calmed down” in light of the news that HMC had managed to raise S$70 million.

When TODAY visited the company’s premises at Thye Hong Centre at Leng Kee Road on Thursday afternoon, an employee of a pharmaceutical company was seen walking out of the office with seven cheques in hand.

The employee, who declined to name his firm, said the cheques were payment for medical supplies. The amount written on the cheques ranged from a few hundred dollars to over S$4,000.