The Cochlear Limited (ASX: COH) share price has edged slightly lower today as shares resume trading after being placed in a trading halt yesterday. This morning, the healthcare provider announced it has successfully raised $880 million in institutional funds.
$880 million raised in an institutional placement
Cochlear announced today that it has completed its capital raising of $880 million via a fully underwritten institutional placement of approximately 6.3 million new fully paid ordinary shares. Each of these shares is priced at $140 per share, which is a 16% discount from the stock's previous closing price.
Cochlear noted that it had witnessed strong demand for the placement and all the shares were able to be fully allocated to the company's existing institutional shareholders.
The size of the placement was initially set to $800 million on March 25. However, this was later increased to $880 million due to strong demand from both local and global investors.
Cochlear reported yesterday that the coronavirus outbreak is anticipated to cause major disruption to its business. This comes as elective surgeries such as those for Cochlear implants are deferred across a growing number of countries globally, including many European countries and the US.
Current difficulties for the company from the coronavirus crisis have been compounded by Cochlear's recent lost court appeal in the US. The healthcare company was ordered to pay US$268 million in damages to two separate research institutes in the US regarding patent infringements.
Where the new funds will be allocated
Cochlear noted that the new funds will be used to strengthen the company's balance sheet and provide it with additional flexibility from a liquidity perspective in the current uncertain and volatile economic times ahead. Future net debt will also be significantly reduced, and the company now believes it will be well placed to emerge at the other end of the crisis in a relatively strong financial position.
The company also believes that there will be a recovery in demand for its services as the crisis eases and elective surgeries return to normal. This is due to the high demand for Cochlear's products and the critical role they play in patients' lives.
Cochlear noted that the settlement of the placement is anticipated to occur on 30 March 2020. These shares are expected to be issued and start trading on the following day, 31 March.
Commenting on the successful capital raise, Cochlear Chairman Rick Holliday-Smith said: "We are grateful and delighted with the strong support for the Placement shown by our shareholders, with many having been shareholders for many years. We now have a fortified balance sheet and are well positioned to emerge from this global health pandemic in a strong competitive position."
