OUE Lippo Healthcare has launched a strategic recapitalisation plan backed by its major shareholders in a bid to build a sustainable capital structure.

The transactions will involve converting OUE Lippo’s existing shareholder loans and accrued interests of $189.6 million into 4.0% convertible perpetual bonds.

The perpetual securities will be convertible into ordinary shares of the company at 7 cents per share.

There is no fixed redemption maturity deadline and redemption of and future distributions of the perpetual securities will be at the sole discretion of the company.

The perpetual securities are non-redeemable and non-convertible into shares of the company for a period of 5.5 years from the date of issuance.

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The conversion price is at a premium of 125.1% over the net tangible assets (NTA) per share of the company as at Dec 31, 2020, and 79.5% over the closing share price of the company as at Feb 16.

According to the company, the company has been in a net liability position over the last few years, and that the proposed transaction will strengthen its financial position.

The NTA and NTA per share will grow to $327.8 million from $138.2 million and 7.38 cents per share, from 3.11 cents per share.

“The board is thankful for the patience of all our shareholders and the commitment of our controlling shareholders, OUE and ITOCHU Corporation, whose support is pivotal for the success of the proposed transactions. The features of the perpetual securities allow the company to pursue its business plans from a position of strength, which is even more critical given the challenges and opportunities arising from the Covid-19 pandemic,” says chairman Lee Yi Shyan.

Shares in OUE Lippo Healthcare closed flat at 3.7 cents on Feb 23.