IBA Health raising $124m to pare debt

HEALTH information technology firm IBA Health Group will seek to raise up to $124 million by issuing new shares to reduce debt.

IBA said yesterday it was offering two shares for every seven held by shareholders, at 55c per share -- a 29 per cent per cent discount to the closing price on Wednesday.

The institutional component of the offer, representing about $77 million, was committed.

IBA said its largest shareholder, AEP Financial Services Holdings, had committed to taking up its full entitlement, equivalent to about $32 million.

The balance of the institutional offer, about $45 million, is underwritten by ABN AMRO and UBS.

The retail offer, on the same terms as the institutional offer, is not underwritten.

IBA said it intended to use the proceeds of the offer to retire subordinated secured borrowings of $60 million from AEP, and other senior borrowings.

"The equity raising places IBA in a strong capital position to continue to benefit from investment in health IT by governments worldwide, and the computerisation of healthcare records," IBA chief executive Gary Cohen said.

"The outlook for the company is robust," he said.

IBA reconfirmed its 2009 full-year guidance for revenue of $540 million to $560 million and earnings before interest, tax, depreciation and amortisation of $120 million to $130 million.

"The company is well positioned to generate growth in the current economic downturn, with approximately 90 per cent of forecast revenues for full-year 2009 funded by governments either directly or indirectly," IBA said.

"Additionally, as at the end of January 2009, approximately 94 per cent of IBA's forecast full-year 2009 revenues were recurring, contracted and expected."

IBA shares, which were in a trading halt on Thursday, last traded at 77.5c.