Aspen to raise R1.9 billion through sale of non-core assets
The drug maker is on a quest to reduce its smothering debt load.
South Africa-based drug maker Aspen Pharmacare said it has agreed to sell its portfolio of prescription and over-the-counter products to US generics maker Mylan for A$188 million (R1.9 billion).
The move is part of Aspen’s strategy to disinvest from its non-core assets and use proceeds from the sale of assets to reduce its debt load. This is strategy recently launched by Aspen CEO Stephen Saad (pictured).
Aspen’s borrowings include a €1 billion (R16 billion) loan that matures in May 2020 and a €500 million (R8 billion) facility due May 2022, according to data compiled by Bloomberg.
The proceeds from Aspen’s sale of its portfolio of prescription and over-the-counter products to Mylan will go towards reducing its debt.
In December, Aspen entered into a deal with Mylan to distribute a portfolio of prescription and over-the-counter drugs in Australia and New Zealand. At the time, Aspen said that the deal was part of its approach to manage its drug portfolio, which will allow “enhanced operational focus and removing complexity.”
Under the same deal, Mylan was also given an option to buy the portfolio.
Aspen said on Monday Mylan will buy the portfolio for a maximum consideration of A$188 million, of which A$93 million is payable by the end of May, A$30 million is due in January 2020, and up to A$65 million is payable in September 2020.
“This divestment is in line with the Group’s ongoing portfolio management approach and its stated intention to not only acquire value enhancing products, but to also divest of non-core assets, thereby ensuring enhanced operational focus. The proceeds will be used to reduce Aspen’s gearing,” the company said in a statement.
Aspen’s latest sale follows the completion of another long-awaited sale of its nutritionals business, in which the proceeds would also be deployed at reducing its debt.
On May 17, Aspen said it had finally been granted approval to sell its nutritionals business to France’s Lactalis. Aspen plans to use the estimated R10.4 billion in net proceeds to reduce borrowings.