Primary health care operator Assura lost a chunk of its market value after announcing a deeply discounted rights issue.
The firm plans to raise around £35.3m through an underwritten rights issue on the basis of 2 new shares for every 7 held, with the shares to be issued at 30p per share. Prior to the announcement, the shares were trading at 39.75p.
The company intends to use the funds it raises to cancel the interest rate swap it has with the National Australia Bank (NAB).
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"Unprecedentedly low interest rates have caused the NAB interest rate swap to open up a large mark-to-market loss," explained Simon Laffin, non-executive chairman of Assura.
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The cancellation of the swap is expected to reduce the group's future annual interest payments by more than £5m, and will help to secure future dividend payments. For now, however, the board has suspended its interim dividend but has pledged to recommend a final dividend for the year.
The company is close to finalising terms of a £110m 10-year secured bond which will refinance the group's debt arrangement with NAB, which is due to be settled in March 2013.
In an update on trading for the six months to the end of September, the company revealed revenue grew from £13.9m last year to £18.3m, with the acquisition of AH Medical Properties contributing £4m of that sum.
The reported loss before taxation was widened to £23.3m from £9.4m last year, after the company took a massive hit on the revaluation of derivative financial instruments; this time round the value of the instruments was written down by £37.1m, which dwarfed even last year's £20.8m write-down.
Stripping out the effects of the financial instruments, underlying profit before tax rose 21% to £13.9m from £11.4m in the first half of the previous financial year.
Loss for the period from continuing operations was £10.3m, compared to £9.8m for the same period a year ago.
At 30 September the group had cash of £48.7m up from £39m at 31 March, while net debt decreased from £323.7m at 31 March to £320m.
Net asset value per share was 50.6p, down from 54.0p at the beginning of the year.
Nigel Rawlings, chief executive officer of Assura, said that, as an operator in the niche primary care property sector it is less exposed to general economic cycles. "Despite this, we believe it prudent to assume that average rental growth may slow somewhat in the near future, but yields, reflecting the strong long-term fundamentals, appear to be stable," Rawlings said.
The share price fell 11.95% to 35p by 15:32.
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