Aster DM Healthcare Converts Loan into Equity, With Preference Shares in Alfaone Medicals

Aster DM Healthcare Limited has announced the conversion of loans into equity shares and Optionally Convertible Redeemable Preference Shares (OCRPS) in its associate company, Alfaone Medicals Private Limited. This strategic move is aimed at improving the capital structure, boosting profitability, and fostering growth for Alfaone Medicals. The share price of Aster DM is trading 0.65% higher on the NSE as of 11:25 AM on January 01, 2025. 

Loan Settlement and Shareholding Update

The company has converted ₹59.49 crore of loans into equity shares, raising its equity stake in Alfaone Medicals to 48.92%. Additionally, ₹166.46 crore has been converted into OCRPS. This restructuring does not involve any fresh capital infusion but leverages existing loans to strengthen Alfaone Medicals’ financial standing.

Financial and Business Overview

• Turnover: Alfaone Medicals reported ₹6.99 crore in FY24, with a history of ₹17.66 crore in FY23 and ₹5.34 crore in FY22.
• Industry: Operating in the healthcare sector, the company focuses on providing medical solutions and services.
• Ownership: With this transaction, Aster DM Healthcare now holds 32.94% in equity shares and 100% in OCRPS, ensuring greater control and governance rights.

Objectives of the Transaction

The key objectives of this conversion include:

1. Capital Structure Enhancement: Strengthening the balance sheet by reducing debt obligations.
2. Operational Growth: Facilitating future expansion and profitability.
3. Governance Improvements: Establishing governance frameworks with pre-emptive and anti-dilution rights for Aster DM Healthcare.

Regulatory and Valuation Details

• Approvals: No additional regulatory approvals are required for this transaction.
• Valuation Method: Equity valuation was conducted using the Discounted Cash Flow (DCF) method, while OCRPS valuation was based on Fair Value certified by KPMG Valuation Services LLP.

Governance and Shareholder Agreements

An amended shareholders’ agreement has been executed to define governance structures, rights, and obligations, including:

• Nominee Directors: Aster DM Healthcare gains the right to appoint directors.
• Voting Rights: Affirmative votes are required for key decisions.
• Transfer Restrictions: Pre-emptive rights and call options provide control over share transfers.

Impact on Management and Control

Despite the increased shareholding, there will be no direct impact on the management or control of Aster DM Healthcare. Alfaone Medicals will operate independently, guided by the governance framework established in the shareholders’ agreement.

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