The shareholders of Babylon, a British healthcare start-up that has soared in popularity during the pandemic, will be wiped out as the company’s main lender is set to take over the business.
Babylon said Wednesday that London-based lender AlbaCore Capital was carrying out “a restructuring and recapitalisation” of the firm.
As part of the agreement, AlbaCore will amend the terms of an existing $300 million loan provided to Babylon, while also extending $34.5 million of new financing. Babylon said its core operating business will be transferred to “AlbaCore and other investors.”
Babylon said the sale will occur “without approval or any payments to” its shareholders because AlbaCore “will exercise rights under its debt agreements.” Shares are down more than 80% since Tuesday.
The move will see the digital healthcare company return to private ownership after 18 tumultuous months of trading in which its shares have plunged 99%.
It covers a challenging period for Babylon, which had been championed by former health minister Matt Hancock as a ‘game changer’ for health services during the pandemic and has grown rapidly through partnerships with the NHS.
Founded in 2013 by British-Iranian entrepreneur Ali Parsa, Babylon Health’s GP at Hand app is used by around 100,000 patients in the UK to access NHS General Practitioners virtually, acting as their primary care provider.
The company has previously received investment from Saudi Arabian sovereign wealth fund, Swedish venture capital group Kinnevik and data company Palantir. It declined a London listing in favor of going public in New York via a special purpose acquisitions firm in October 2021.
Prior to the flotation, Babylon was valued at $4.2 billion and would receive $575 million from its merger with blank check firm Alkuri Global. But as the date to vote on the merger neared, about 90 percent of shareholders asked to buy back their shares despite the deal’s approval, which left Babylon with just $275 million in cash.
Due to a lack of funding, the company has cut staff, canceled partnerships with the NHS and attempted to sell parts of its business. Net losses continued to grow, more than doubling to $63.2 million in the three months to the end of March, compared to the same period last year.
Seems in November described the company’s performance since its listing as an “unbelievable and unmitigated disaster” but said it was committed to achieving profitability.
Last year, Babylon issued a reverse share spit to narrowly avoid delisting after its shares failed to maintain an average closing price of at least $1 over a period of 30 consecutive trading days.
AlbaCore previously provided a $30 million bridging loan to Babylon in March, about two months of working capital, according to company documents and first reported by the Telegraph. It first provided a $200 million loan in 2021.
Parsa did not respond to a request for comment.
This article has been changed to clarify Babylon’s net losses
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