Cochlear in $850 million Covid-19 capital raising

Hearing technology company Cochlear has announced a massive $850 million capital raising to fortify the company to weather the Covid-19 coronavirus slowdown in sales.

The company’s shares went into a trading halt today as the company revealed a share placement to institutions and a share purchase plan for existing shareholders.

The raising is prices at $140 a share, compared to the company’s closing price last night of $168.

This compares to a high of $251.55 in February.

CEO Dig Howitt has pointed to a slowdown in implant surgeries caused by the virus pandemic especially in Europe and the United States as likely to cut Cochlear’s sales and profit this year.

However the company also suffered a major blow when the US Court of Appeal had affirmed a district court award of US$268 million against the company in a long running patent dispute.

The company had made provision for the adverse court decision, but nonetheless this does affect its cash position and ability to weather what might be a long downturn in sales.

Cochlear is an icon of Australian medical technology and is very strong financially.

The fact that even this company has gone to the market with such a huge raising suggests there must be many companies whose financial situation is already dire.

Small companies have seen their share price tank, making it extremely difficult for them to access new capital.

Now we see even the strongest companies are worried, very worried.

Picture: Cochlear/Dig Howitt

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