Life Healthcare to fund alliance deal with R10bn offer

Johannesburg - Life Healthcare Group Holdings [JSE:LHC] plans to raise as much as R10.7bn ($756m) through a rights issue as the South African company seeks to reduce debt after it expanded into the UK market.

The fully underwritten offer will cut Life Healthcare’s debt to "the appropriate level of gearing for the company to restore its investment grade credit rating," the Johannesburg-based owner of private hospitals said in a statement on Tuesday.

The funds will also enable the company to pursue a capital investment program and pay dividends, it said.

Life Healthcare agreed in November to buy Alliance Medical Group of the UK for as much as £800m including debt as the South African company follows larger competitors into that market.

The rights offer will refinance a portion of the bridge facility that Life Healthcare extended to secure the deal and take care of financing costs linked to the Alliance acquisition.

The offer is subject to shareholder approval at the company’s annual general meeting on January 25, with details to be announced after that date, it said.

The shares rose 1.2% to R32.06 as of 12:14 in Johannesburg.