Capitol Health issues dog former AFL CEO Andrew Demetriou
Date
April 27, 2016 - 12:15AM
Former AFL boss, Andrew Demetriou, has had a few ailments causing him trouble since retiring from the big game in 2014 – like the radiology group he has chaired for the last 18 months, Capitol Health.
It has not been a happy tenure. The company's share price has cratered as the government prepares to cut bulk-billing rebates for radiology services as of July this year.
Over the past year, the company has gone from a share price high of $1.11, to a low of 11c last month. Its current market cap of $99 million is only just above the debt it owes its bank – NAB – a key sponsor of Demetriou's previous employer, the AFL.
As Capitol Health reported in its profit-challenged half year result, NAB "approved" a revised banking facility for the group of $140 million, which reduces to $115 million by December 2019, with Capitol's financial covenants getting a significant squeeze along the way. How fortuitous for NAB.
"The board also engaged NAB to investigate raising up to $50 million" through a bond issue this half year, according to Capitol.
The raising will be used to repay debt, including that owed to NAB, it said.
NAB, for its part, is apparently marketing the whole thing to some of its high net worth customers.
Analyst Stewart Oldfield decided to have a look at a video marketing the notes to these sophisticated investors and report his thoughts in his first email to clients from his new shop, Field Research.
The video features Capitol Health boss, John Conidi, and NAB's head of capital financing, Mark Todd.
"This is a very stable industry we are working in. That safety of capital and the attractive yield is definitely there," said Conidi.
And how about those government cuts which have hit the stock?
As Oldfield reports: "He (Conidi) does go on to say that the radiology industry is going through some 'slight reduction in growth because of government action'. 'But we think that will come back over time'."
NAB's Todd then stresses to the video audience this notes issue was not something dreamed up by NAB.
"The bank has not imposed by fiat that we should do this," said Conidi.
"We suspect you have not heard the last about this bond issue," was the final word from Oldfield.
Read more: http://www.smh.com.au/business/cbd/capitol-health-issues-dog-former-afl-ceo-andrew-demetriou-20160426-goey24.html#ixzz46zkN5uuj
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