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Healthcare Business International quotes Paul Arathoon on Babylon Health's new restructuring plan and issues for shareholders

Shareholders in digital health company Babylon, which was worth $4.2bn when it listed in October 2021, face being wiped out as it reverts to private ownership.

Paul Arathoon, Partner, comments for Healthcare Business International:

“If the proposals go ahead, the retail shareholders get absolutely no compensation. AlbaCore will strip out the profitable operating bits it considers to be worth saving and the shareholders will be wiped out.

“Shareholders are looking at quite a loss, but obviously that’s life on the public market. The US is a very litigious place, so there will likely be some legal recourse. Looking at the May release, you can see the additional $35.4m from AlbaCore is subject to finance terms and conditions, so the question is what happens to Babylon if it doesn’t come through?

“As soon as the US SPAC transaction came along, 90% of shareholders decided to sell meaning the market cap was around $300m short of what Babylon would expect, which had to be raised through debt. Now the debt holder is in control of the process, and the interest rates of any new debt it might need is much higher than it would have been 12-18 months ago.

“Babylon didn’t raise the money it thought it would, so it couldn’t do everything it wanted to do. But I expect AlbaCore will want to retain key people, and it clearly looks at the business model and thinks it could work.”

Read the full article in Healthcare Business International here (paywalled).

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