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Thursday, 2 September 2021

Speed Medical secures nearly USD 100 mn in financing from Luxembourg-based EM investor

Speed Medical has landed some EGP 1.57 bn in financing from EM-focused alternative investment outfit Global Emerging Markets (GEM) in an agreement inked between the two firms yesterday, according to a joint press release. Neither party was immediately available to answer questions.

The funds will be extended under a “share subscription facility” on a 36-month term. Our take is that this is effectively a convertible debt-for-equity arrangement: Speed can draw down funds on an as-needed basis, with GEM getting shares in Speed for every EGP Speed draws. This type of financing is “potentially lower cost and less dilutive … as the company controls the timing and amount of each drawdown,” Speed Chairman Mahmoud Lasheen said in the statement.

How much of Speed could GEM get if Speed calls the full facility? It’s really not clear — the press release does not specify a pricing mechanism for the equity, so it’s not clear whether the price at which the drawn equity would convert into newly issued shares is at yesterday’s price, a future price, a trailing average…

Speed said it would use the financing for its “aggressive expansion plans,” including for acquisitions and new ventures, as well as to consolidate its existing bank debt, with a separate disclosure (pdf) saying the funding will help Speed “pay off the banks’ loans in full.” Lasheen added that the facility should allow Speed to start issuing dividends “commencing in the coming year.”

But not for the now dead-in-the-water Prime Speed acquisition: In an unusually frank regulatory filing in late August, Speed Medical announced it was backing away from its potential 100% acquisition of Prime Speed.

Speed Medical will still need to secure the approval of the company’s board of directors and general assembly before the GEM transaction is finalized.

GEM is a Luxembourg-based private investment group worth USD 3.4 bn that specializes in emerging-markets and has made transactions in over 70 countries.

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