NZ’s biggest retirement village company to raise $1b - second capital raise in two years

Ryman Healthcare is raising $1 billion to reduce debt. Photo / Supplied

New Zealand’s biggest retirement village company - Ryman Healthcare - is tapping shareholders for $1 billion, which it says will slash its debt and provide a platform for growth.

The offer comprises a $313 million underwritten institutional placement and $688m underwritten pro-rata accelerated non-renounceable entitlement offer.

Today’s capital raise is the second big one in two years.

In February 2023, the company launched a $902m issue to pay down debt and to fund future developments.

Chief executive Richard Umbers said today the company needed to reinforce its balance sheet and in particular to reduce its debt levels.

“Our significant recent investment in our portfolio underpins our potential for future growth but has resulted in higher debt than we are comfortable with in current market conditions.”

“The purpose of the offer is to enhance Ryman’s financial position in the current market and provide the platform to achieve improved performance and value for shareholders as market conditions recover,” the company said.

Ryman chairman Dean Hamilton said the equity raise would reset the company’s balance sheet, reducing gearing from 37.3% to 23.1%.

The offer would provide Ryman with “the foundations to deliver further transformation initiatives, with a renewed focus on its operational reset”.

Shane Solly, portfolio manager at Harbour Asset Management, said the move would allow Ryman to reduce balance sheet risk and would allow it to get on with its restructuring.

About 328m new shares are to be issued under the offer, representing about 48% of the existing shares on issue.

The placement and entitlement offer is pitched at $3.05 a share, representing a 21.9% discount to the theoretical ex-rights price going on Ryman’s closing price of $4.31 on Friday.

The offer is underwritten by Craigs Investment Partners Limited, Forsyth Barr Group Limited and Jarden Partners.

The offer is being conducted today and closes tomorrow. In the meantime, the stock has gone into a trading halt.

Hamilton said the company had already made significant progress over the past 12 months and had moved to a more functional structure.

“Resetting our balance sheet will support us to progress our business improvement programme further.”

Chief executive Naomi James, who joined Ryman in November, said the business improvement programme was focused on releasing cash from the business, targeting $500m over the next three to five years.

Shares in Ryman, a former market high flyer, have fallen by about 8% over the past 12 months.

Last November, Ryman reported that it had halved its net profit after tax and is suffering rising vacancies in its properties, then running at 12.1% empty.

The company made $94.4m net after-tax profit in the half-year to September 30, down from $187.1m in the previous corresponding period.

Jamie Gray is an Auckland-based journalist covering the financial markets and the primary sector. He joined the Herald in 2011.