Retirement village operator Ryman Healthcare [RYM] is asking shareholders for about $1 billion - its second substantial capital raising in two years - as it looks to reduce debt to "reset" its balance sheet.
In February 2023 Ryman raised $902 million, which all went to extinguish US 'private placement' debt.
The $1 billion to be raised now, through a $313 million underwritten institutional placement and an approximately $688 million underwritten pro-rata accelerated non-renounceable entitlement offer, will reduce Ryman's gearing "to more prudent levels" within a range of 20-30%, below the previous 30-35% medium-term target, the company said.
"Ryman is taking decisive action to reset its balance sheet through a $1.0 billion equity raise to create a sustainable capital structure. This will enhance financial stability and resilience in the current market, and provide the platform to achieve improved performance and a return to growth over time," the company said.
The company's shares went into a trading halt on NZX on Monday to allow the raising to take place. The offer price is $3.05 per share compared with a market price on Friday of $4.31.
Ryman was founded in Christchurch in 1984 and owns and operates 49 retirement villages in New Zealand and Australia. Ryman villages are home to 15,300 residents, and the company employs 7,700 staff.
Ryman says the move will reduce net interest-bearing debt from $2.56 billion to $1.59 billion.
Regarding its lending arrangements, the company says it has agreement to amend its syndicated facility agreement.
It has received a waiver of interest cover ratio (ICR) covenant with testing to occur next at the 30 September 2026 test date at a lower covenant of 1.5x (on and from that date).
The company has extended $539 million of its banking facilities and has no near-term maturities.
Ryman says the capital raise provides flexibility to undertake and operational reset and manage the business to optimise cash generation.
The equity raise and future projected release of cash is "expected to provide headroom and capacity for a return to disciplined growth over time".
The board remains "committed to reviewing dividend policy prior to the end of FY26".
In the half-year to September 30 Ryman reported net profit after tax of $94.4 million, down 50% from $187.1 million in the first half of 2024.
In a trading update with the capital raising material, Ryman said while sales volumes have been steady through to the thrid quarter of the March 2025 financial year, sales applications have declined "impacting projected sales volumes in 4Q25 and over 1H26". The company says "targeted incentives and tactical pricing" are expected to improve applications and drive sales into the second half of financial year 2026.
Ryman Chair Dean Hamilton says Ryman is "on a journey and have already made significant transformation progress over the past 12 months, including our Board, management and governance refresh, changes to our pricing model and moving to a functional structure".
"Resetting our balance sheet will support us to progress our business improvement programme further."
Ryman CEO Naomi James, who joined the company in November 2024, says that the business improvement programme is now "firmly focussed" on releasing cash from the business (over $500m target over the next three to five years), targeting sustainable business improvement ($100-150m target in annualised cash improvement through both revenue and cost opportunities over three to five years), and taking a disciplined approach to growth.
"We are transforming how we operate so that our residents continue to have the best experience in retirement living, with access to industry leading care. Our continuum of care model uniquely positions Ryman to meet the increasing demand for aged care in New Zealand and Australia, which is growing rapidly ahead of the supply available in both countries. Since joining Ryman, I have seen first-hand our unique value proposition in the market, which offers our residents access to the level of care they require as their needs change, giving families the confidence their loved ones will be looked after through their later years."
19 Comments
"imagine the headline if one of our banks seeks to reinforce their balance sheet....."
Some privately owned unlisted businesses without access to additional capital are going to face cash flow stress and be unable to survive in its current form, with significant impact for existing shareholders.
If Ryman was unlisted and did not have access to additional capital and support from existing shareholders, the company may have had significant cashflow stress and an entirely different outcome.
Just because a company is listed, access to capital may still be unavailable - look at US listed Nikola which had a market value of US$27 billion at the peak. This is equivalent to NZ$47 bn, about 26% of the entire current market cap of NZ. Nikola just filed for bankruptcy.
Its actually far harder than that. They have to run a business to keep those properties tenanted. None of the other REITS have to do this.
And the business they have been running is getting smashed by an increasing cost base... and they are struggling to push that on to the oldies.
If the Retirement Villages are struggling now, you can imagine what they will be line in 15 years!
The NZ Property Ponzi cash machine is Kaput, Redundant and simply no longer the road to riches.
I know old folks who are spitting tacks, that they can no longer sell for "deserved 3 to 4x" their purchase price of 10 to 30 years ago......and pulling out of selling, their now mostly empty big house.
This crash has a while to roll yet, with some forced sellers are still to meet the market, to fund the Rymans life.
Via Sharesies:
As a Sharesies investor, you can take part in the placement by applying for new shares at the fixed price of $3.05 NZD. This represents a 29.2% discount to Ryman’s closing price of $4.31 on the NZX on Friday, 21 February 2025.
Applications for shares in the placement need to be submitted through Sharesies before 4:30 PM today, Monday 24 February 2024. We know this is a tight turnaround, but that’s due to the nature of this type of offer.
This placement will be mainly targeting existing and new institutional shareholders, so please bear in mind that scaling is highly likely, and you may only receive some or even none of what you apply for.
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