Vision Eye Institute says its successful capital raising, via a two for three pro-rata non-renounceable rights issue that was completed mid-January, will enable the company to reduce debt, pursue new opportunities for day surgeries and consider the resumption of dividends in the next year or two.
Speaking exclusively with mivision, the company’s Chief Executive Officer, Brett Coverdale said the response to the capital raising, of AUD 27.2 million was positive.
“The response to the raising was very good – we had a good take-up from institutional investors who will support the company’s growth going forward. Intelligent Investor, Paradice Investment Management, MLC Wealth Management all now hold around 5 per cent or more of the company. And there are four or five other institutional investors that sit within the 2, 3 and 4 per cent range
as well,” said Mr. Coverdale.
He said having institutional investors on board also gives confidence to retail investors, the ophthalmologists who are shareholders and to Primary Healthcare, which has maintained its investment at around 19 per cent of the company.
The share price has reflected better than I’d foreseen in my own mind, post the capital raising…
Doubled their Money
Shareholders will also take heart from VEI’s rising share price. Existing shareholders were given the opportunity to participate in the offer at AUD$0.34 per share. This price represented a discount of approximately 15.2 per cent to the volume weighted average share price (VWAP) for the shares on the Australian Stock Exchange over the 30-day period ending 6 December 2012. Shares were allotted on 22 January 2013, and by 29 January the price had already reached as high as AUD 0.585. At the time of going to print, in early February the share price had risen to AUD 0.63.
“The share market seems to have given us a tick of approval for what we’ve done,” said Mr. Coverdale. “Those who took up the offer have almost doubled their money on paper. That’s encouraging, particularly for people who’ve been invested with Vision Eye Institute for a while. They have had a rough ride so
it’s good that they’ve been able to get something out of this too.
“Quite a few of our surgeons are shareholders as well, so this is positive from their personal perspective. The feedback I’ve received in the last month has been very positive.”
Mr. Coverdale said the capital raising of AUD$27.2 million will reduce debt levels which has plagued the company since the Global Financial Crisis and restricted investment in growth and development.
“Vision has always been a strong company – even during difficult times, it’s been good from a medical perspective. The financial problems we have had, have nothing to do with our medical work.
He said the financial problems were due to a changed world of finance post GFC.
“The level of acceptable debt for every company changed post GFC. So our financiers embarked us on a programme of repaying our debt far quicker than what was envisaged. That’s where the cash has gone over the past few years.
“So we’ve had to adapt and we will continue to do so over the next couple of years,” he said.
Improved Utilisation of Day Surgeries
Mr. Coverdale said although there are no firm plans for the growth of Vision Eye Institute in the pipeline, he will be looking at opportunities. “My interest is in looking at improving the utilisation of some of our day surgeries – so building up existing surgeries and bringing in new surgeries in selected geographic regions,
if the opportunity presents.
“We also welcome having visiting surgeons – non-VEI surgeons – into our day surgeries where they can access the equipment and the technology that we’ve invested in. That delivers a win for all parties – VEI, independent ophthalmologists and patients as well.”
As for how far the share price will go? Mr. Coverdale said he’s not prepared to speculate.
“The share price has reflected better than I’d foreseen in my own mind, post the capital raising, so I’m not about to speculate about where it’s going next.
“What I will say is this is a really positive outcome for our company and all the people who are associated with it – our doctors, patients, staff – the rest is up to us to continue to improve on what we’ve already done and to live up to the expectations that our shareholders have.”
That’s the challenge.