Gateway invests in Singapore's Healthway Medical

The investment has been structured through a convertible notes issue in two tranches, which could result in Gateway taking as much as a 90% stake in the Singapore-listed company. The notes carry no coupon and are redeemable at maturity at 100% of the principal amount plus a cash redemption premium. The first tranche of S$10 million has been received.

According to a statement, Healthway will use the capital for immediate operational needs, including the settlement of salaries and the restoration of normal payment schedules to its doctors and suppliers. The company, which has struggled financially on the back of a number of questionable loans, requires S$10.7 million by the end of the month to settle overdue payroll and debt obligations, but held only S$1.4 million in free cash as of March 9.

Healthway's allowance for doubtful loans and other receivables was about S$36.6 million at the end of 2016, compared to S$312,000 a year earlier. It posted a loss of $S40.8 million in 2016 versus a S$904,000 loss in 2015. Revenue during the year was steady at about S$23.4 million.

Confirmation of the investment follows closely on a takeover bid from Hong Kong-based investor Lippo China Resources. Lippo, which currently holds a 22% stake in the company, had offered to buy all issued and paid-up ordinary shares at S$0.042 apiece. This compared to a S$0.034 conversion price in the Gateway deal. The stock has been in decline for the past few years and was trading at about S$0.04 as of midday on March 27.

Founded in 1990, Healthway claims to have the largest network of medical centers and clinics in Singapore and a fast developing footprint in Shanghai, with more than 100 facilities in total. Specializations include paediatrics, orthopaedics, dental surgery, sports medicine and aesthetics.

Gateway is investing via its first fund, which focuses on growth capital and special situations across Southeast Asia, South Asia, the Middle East and Africa. Previous investments in Asia include Indonesian convenience store operator Indomaret and Indian food company Cremica. 

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• Topics
• Southeast Asia
• Healthcare
• PIPEs
• Restructuring
• Singapore