The private equity owner of a company that aims to revolutionise healthcare with hi-tech gadgets has been forced to relinquish half its shares in a costly debt deal.
Charterhouse Capital and other shareholders handed over almost half the equity in Tunstall Healthcare to its senior lenders and management after the company wrestled with an unsustainable debt burden.
Charterhouse bought the Yorkshire-based manufacturer of panic buttons and bed sensors in 2008 for £514m, anticipating a boom in demand from an ageing population. However, an explosion in competing technology has made some of its gadgets obsolete. Tunstall, which has 3,000 staff globally, remotely connects about 2.5m users to their carers, families and medics.
It had debts of £1.7bn at the end of September, including £300m owed to lenders and £1.2bn to investors. The cost of servicing this debt pushed the company to a £391m pre-tax loss last year.
In the debt carve-up, its senior lenders were handed 24.9% of Tunstall’s shares, while management were given 25%, leaving Charterhouse and other shareholders holding the balance. Before the deal, Charterhouse had 61% of Tunstall’s shares. In return, the lenders agreed to relax covenants on their debt.
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The agreement, detailed in Tunstall’s annual report, also reveals it spent £18.5m last year on an abortive attempt to sell itself for up to £700m.
Tunstall insisted it continued to invest in growth. “We see the emergence of connected healthcare as an increasingly important factor in delivering affordable and sustainable healthcare,” it said.