Cochlear increases equity raising target to $880m

The company said in an announcement to the ASX that it expected a “significant negative impact” from COVID-19 for an uncertain period of time. Picture: Janine Eastgate

Medical device company Cochlear has upsized its equity raising to $880m on the back of strong investor demand.

It comes after the company entered a trading halt on Wednesday, announcing it would raise $800m through a fully underwritten institutional placement at $140 per share and also a $50m share purchase plan.

However, the institutional placement will now be worth $880m.

The funds are being used to shore up the company’s balance sheet and provide liquidity amid the coronavirus crisis.

Working on the raise is JPMorgan, which is also fully underwriting the deal.

The raising price of $140 per share is at a 16.7 per cent discount to Cochlear’s last closing price of $168.

It comes as Webjet and oOh!Media also make efforts to raise equity at discounts of more than 40 per cent to their last traded share prices.

The raise is by way of a fully underwritten institutional placement worth $800m.

Cochlear has also launched a non-underwritten share purchase plan to raise up to $50m.

Should the raise for the $9.72bn blue chip stock be successful, it could pave the way for other raisings amongst major ASX-listed companies.

The company said in an announcement to the ASX that it expected a “significant negative impact” from COVID-19 for an uncertain period of time.

This is as COVID-19 was expected to cause significant business disruption for Cochlear as elective surgeries are deferred across a growing number of countries.

It also comes after Cochlear has faced a long-running patent infringement case.

In 2018, the US District Court awarded $US268 million in damages against the hearing device maker in the case.

At the time, the company said it would appeal the judgment in the case brought by the Alfred E. Mann Foundation for Scientific Research and Advanced Bionics, which was expected to take about two years.

This month, Cochlear announced that it had lost the appeal.

“The combination of COVID-19 and the likely increase in debt from the adverse judgment in the long-running AMF case, is expected to push debt above the board’s comfort levels.”

Cochlear also has a credit approved commitment for an additional $150m from an existing lender and the suspension of the company’s dividend until trading conditions improve.