Circle Holdings, which recently became the first private health company to run an NHS hospital, is raising nearly £50m from investors to repay debt and allow it to bid for further contracts.
The company, run by former Goldman Sachs banker Ali Parsa, plans to issue 67.8m new shares at 70p each to bring in £46m after expenses. In the market Circle's shares have dropped 48p to 65p.
Circle said the cash would repay an existing £14m loan with an annual interest rate of 25%, provide working capital for its existing projects including the NHS hospital at Hinchingbrooke in Cambridgeshire and an independent site in Bath, and fund the cost of bidding to take over further NHS trusts as and when they are put out to tender. Parsa said:
In difficult market conditions, we have taken a strategic decision to raise sufficient funds to clear the group's high-interest debt, and fully finance our existing business plan.
Its future projects include Reading, which is due to open later this year, and Manchester, where it is currently seeking funding. But it has deferred development of a site in Birmingham until finance can be obtained.
Circle also announced a reduction in full year losses from £15.4m to £13.6m. It said Hinchingbrooke had started well under its ownership, with improved A&E performance and a number of identified savings.
But it added that given the timeframe of commissioning and constructing future independent hospitals and implementing reforms at Hinchingbrooke, it did not expect to generate positive cash flows in the short to medium term.
