Healthway agrees on amended terms for $70m convertible bonds deal with Gateway

The Healthway Medical Corp Clinic at Blk 201D Tampines Street 21.
The Healthway Medical Corp Clinic at Blk 201D Tampines Street 21.ST PHOTO: LAU FOOK KONG

SINGAPORE - Healthway Medical Corporation, the listed private clinic chain operator facing a cash crunch from doubtful loans, said on Thursday morning (March 23) that it has reached agreement to amended terms for a lifeline S$70 million convertible bonds deal with private equity fund Gateway Partners.

"The board, after taking into consideration amongst others, the more favourable terms of the alternate proposal, including overall lower cost of funding, as well as the speed of disbursement of funds to address the company's immediate liquidity needs, is of the view that the amended and restated agreement is in the best interests of the company and shareholders," Healthway said in a filing with the Singapore Exchange.

Shares of the company, which have been halted from trading since March 20, will resume on Thursday.

The proposed changes to the financing deal involve a change of investment structure. The aggregate S$70 million fully-convertible notes and will be issued in two tranches of S$10 million and S$60 million. Both tranches will carry no coupon and will mature in five years from the date the first tranche is issued.

The notes are also redeemable at maturity at 100 per cent of the principal amount, and a redemption premium that will allow Gateway to achieve an internal rate of return of 6 per cent.

There is no change of control redemption provisions for the notes.

Healthway said SGX has informed the company that the first tranche of S$10 million may be issued without the need for shareholders' approval. But this approval must be obtained before the second, much larger tranche can be drawn upon.

The company said it plans to use all of the S$8.3 million in net proceeds from the first tranche to meet short term liquidity needs, including payment of salaries or repayment of existing facilities.

Of the expected S$59.8 million in net proceeds from the second tranche, Healthway said it intends to use approximately S$23.8 million for short term liquidity needs.

The remaining S$36.0 million will be used for the organic expansion of GP clinics in various locations and the acquisition of specialists' clinics for specialties such as oncology, dermatology and paediatrics.