Troubled Estia Health makes its balance sheet ‘bullet proof’ raising $137M

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New Estia CEO Norah Barlow (pictured) has been quick to bullet-proof the business (and pay $5.8M to Macquarie Bank), issuing new shares to raise $137M. The shares were offered at $2.10 compared to yesterday’s closing price of $2.44 – the lowest price since listing exactly 2 years ago at $4.50.

The money raised will be used exclusively to reduce debt to $143M. They maintain they will achieve an EBITDA of $86-$90 million for FY17.

The Chairman, Pat Grier, is being replaced by veteran ‘corporate raider’ (and ex-business partner of Malcolm Turnbull) Gary Weiss (pictured). Grier will stay on as a non executive director.

Weiss joined the board in September at the request of the Kennedy family who sold their aged care facilities into Estia just last December. They received $220M in cash and 6.6 million in shares then valued at $7.50 each or $50M. At $2.44 today the shares are worth just $16M – a loss of $32M in 12 months.

Interestingly when Estia shares took their big hit in August the Kennedy family were the first to start buying at prices ranging from $2.57 to $4.29. And now their man leads the board.

Norah Barlow abandoned the easier life of being a professional director to take over the leadership of Estia, it is understood for the next three years.

Given her long corporate record she would not do that unless she was certain the underlying fundamentals were strong and there was an upside. See the next story.


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