Aspen rises on potential Europe deal


The pharmaceuticals group has been selling non-core assets to reduce debt that has been worrying investors.

Aspen Pharmacare’s shares rose over 10% yesterday after it said it was in talks that could see it sell a segment of its European commercial business.

It’s not the first time the pharmaceuticals group has tried to introduce a partner in Europe following a strategic review of its operations and as it sells non-core assets to reduce debt. Last July, the company ended exclusive talks with another potential suitor, without giving a reason for the breakdown in negotiations. It provided no further detail about the latest potential transaction.

Aspen's focus on cutting debt pays off - Moneyweb

The group will release full-year results next month that are expected to show a reduction in debt that will bring it close to its medium-term target. Net borrowings declined to around R38 billion at the end of December after it sold its infant nutritional business and a portfolio of drugs distributed in the Asia Pacific region. In February, it said if the €270.3 million in net proceeds it received from the sale of its Japanese business to Sandoz, a division of Swiss multinational Novartis, had been applied, it would have reduced its leverage ratio to between 3.20 times and 3.30 times, from between 3.5 times and 3.6 times. It has a covenant threshold of 4.0 times with its bankers and aims to reduce the ratio to below 3.0 times in the medium term.

Aspen’s debt has concerned investors, particularly after it was forced to ask its lenders for a temporary increase to its debt ceiling at the end of 2018.

The company is scheduled to publish results for the year to end-June on 9 September. In May, it maintained its full-year outlook and expected earnings for the year to end-June to be higher than last year.

Main Image: Aspen

About Author

Leave A Reply