Cochlear boosts share purchase plan to $220m

Hearing implant manufacturer Cochlear has super-sized its share purchase plan by $170m to $220m, citing strong demand.

Dig Howitt, Cochlear CEO. Picture: James Croucher

Hearing implant manufacturer Cochlear has super-sized its share purchase plan by $170m to $220m, citing strong demand from retail investors seeking to gain a slice of the stock on the cheap.

The company had already raised $880m from institutional investors at $140 a share, a 16.7 per cent discount, in an effort to shield its balance sheet from the coronavirus pandemic.

The increase in the share purchase plan lifts the retail proportion of the offer from 5 per cent to 24 per cent and injects $1.1 billion into Cochlear’s coffers.

Cochlear was one of the first companies to feel the brunt of the coronavirus outbreak, forecasting in February it would suffer a $30m profit hit as a result of elective surgeries being delayed in China, Hong Kong and Taiwan. A month later, as COVID-19 spread around the globe and countries delayed non-essential surgery, the company withdrew its profit guidance.

The capital raising was one of the biggest of the year when it was announced to the market on March 25 and came after its shares plunged 33 per cent from a high of $251.55 on February 19 to $168.

With the capital raising priced at $140 a share, it was the lowest price for Cochlear stock in almost three years.

In a statement to the ASX, the company said it received valid applications totalling $417m from more than 16,600 shareholders for the share purchase plan (SPP), representing a participation rate of 45 per cent.

Cochlear chairman Rick Holliday-Smith said they were “pleased with the high level of retail participation in the SPP”.

“The retail shareholders have benefited from being able to participate in the raising after the institutional investors had fortified Cochlear’s balance sheet by contributing $880m in the placement.