| Fri 26 Oct 2007, 16:32 | | MDC - Medi-Clinic Corporation Limited - Rights off |
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MDC
MDC
MDC - Medi-Clinic Corporation Limited - Rights offer
MEDI-CLINIC CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1983/010725/06)
Share code: MDC
ISIN: ZAE000074142
("Medi-Clinic" or "the Company")
RIGHTS OFFER
1. Introduction
It was announced on SENS on 2 August 2007 and detailed in the circular to
Medi-Clinic shareholders dated 17 August 2007 ("the Acquisition Circular"),
that Medi-Clinic planned to recapitalise the Company pursuant to the acquisition
by Medi-Clinic Luxembourg S.a.r.l. of a 100% interest in Hirslanden Finanz AG
("Hirslanden"), the holding company of a private hospital group in Switzerland
("the Acquisition"), through a rights offer for an amount of up to R4 500
million ("the Rights Offer") (collectively "the Transactions").
2. Rationale for the Rights Offer
The Acquisition Circular provided details of the Acquisition which details are
updated in an announcement also released today. The purchase consideration for
Hirslanden, on an enterprise value basis, is CHF3 364 million, which was partly
settled through debt of CHF2 450 million, raised within Hirslanden on a non-
recourse basis to Medi-Clinic`s South African operations, and an equity
contribution of some CHF1 114 million from Medi-Clinic, which includes expenses,
interest accrued on the purchase price and other costs. The board of directors
of Medi-Clinic ("the Board") has resolved to proceed with the Rights Offer in
order to raise an amount of up to R4 500 million. Approximately R4 000 million
of the proceeds will be applied towards the equity contribution and the balance
used to fund expansion opportunities in Medi-Clinic`s South African operations.
3. Terms of the Rights Offer
The Rights Offer will be for a total of 198 675 497 Medi-Clinic shares ("Rights
Offer Shares") for subscription at a subscription price of 2 265 cents per
Rights Offer Share in the ratio of 50.38197 Rights Offer Shares for every 100
Medi-Clinic shares held at the close of trade on Friday, 16 November 2007. If
fully subscribed, the Rights Offer will raise R4 500 million.
Qualifying shareholders recorded in the register of Medi-Clinic at the close of
business on Friday, 16 November 2007 will be entitled to participate in the
Rights Offer.
Provision has been made for excess applications in terms of the Rights Offer.
4. Underwriting and undertaking to follow rights
The Rights Offer has been underwritten by RMB Asset Management (Proprietary)
Limited (for and on behalf of its clients) and Stanlib Asset Management Limited
(in its capacity as portfolio manager for Liberty Group Limited) (collectively
"the Underwriters"), to the extent that it is made to shareholders other than
Remgro Limited ("Remgro") to a maximum amount of R1 569 million.
An underwriting fee equal to 1.75% of the underwritten amount, being R27 464 664
(excluding Value Added Tax), is payable by the Company to the underwriters which
underwriting commission is, in the opinion of the Board, not greater than the
current market rate charged by independent underwriters.
In addition, Remgro, a shareholder holding approximately 43% in Medi-Clinic, has
irrevocably undertaken to follow its rights in respect of the Rights Offer, and
portfolio managers, representing approximately 7% of the Medi-Clinic shares in
issue, have irrevocably undertaken to recommend to their clients to follow their
rights.
5. Regulatory approvals
The Issuer Services Division of the JSE Limited ("the JSE") has approved the
listings of:
- the letters of allocation in respect of all of the 198 675 497 Rights Offer
Shares with effect from the commencement of trade on Monday, 12 November 2007 to
the close of trade on Friday, 30 November 2007, both days inclusive under the
share code: MDCN and ISIN: ZAE000109096; and
- 198 675 497 Rights Offer Shares with effect from the commencement of trade on
Monday, 3 December 2007 under the share code: MDC and ISIN: ZAE000074142.
The South African Reserve Bank has granted approval for the Rights Offer.
The registration of the form of instruction in respect of the Rights Offer by
the Registrar of Companies appointed under the Companies Act No. 61 of 1973, is
imminent and a further announcement will be made in this regard in due course.
6. Pro forma financial effects
The unaudited pro forma financial effects set out below have been prepared to
assist Medi-Clinic shareholders to assess the impact of the Transactions on the
Earnings Per Share ("EPS"), Headline EPS ("HEPS"), Net Asset Value ("NAV") and
Tangible NAV ("TNAV") per share. Due to the nature of these pro forma financial
effects, they may not fairly present the Company`s financial position, changes
in equity, the results of its operations or cash flows after the Transactions.
The pro forma financial effects are the responsibility of the Board and are
provided for illustrative purposes only.
The unaudited pro forma financial effects disclosed below are different to the
unaudited pro forma financial effects disclosed in the Acquisition Circular due
to an adjustment in the final acquisition price in accordance with the share
purchase agreement.
Pro forma financial effects for the year ended 31 March 2007
Audited before the Pro forma Pro forma Percentage
Transactions,1 adjustments after the change
Transactions
EPS (cents),2 162.5 (79.7) 82.8 (49.0%)
Diluted EPS
(cents), 2 147.5 (70.0) 77.5
(47.5%)HEPS (cents),2 162.2 (79.6) 82.6
(49.1%)Diluted HEPS
(cents), 2 147.2 (69.9) 77.3 (47.5%)NAV
per share
(cents), 3 575.5 596.4 1 171.9 103.6%
TNAV per share
(cents),3 458.9 27.8 486.7
6.1%Ordinary shares
in issue (million) 359.4 198.7 558.0 55.3%
Weighted average
number of
ordinary shares
in issue (million) 357.6 174.2 531.8 48.7%
Notes and assumptions:
1. Extracted from the published audited consolidated results of Medi-Clinic
for the year ended 31 March 2007.
2. For the purposes of calculating EPS and HEPS it was assumed that:
(a) the Transactions were effected on 1 April 2006;
(b) the income statement information of Hirslanden was extracted from its
audited financial statements for the year ended 31 December 2006;
(c) Hirslanden`s income statement information was converted at R5.70:CHF1,
being the average rate for the 12 months ended 31 March 2007;
(d) existing debt within Hirslanden was refinanced by new debt on acquisition,
of which the offshore component comprises CHF2 450 million, of which interest on
CHF840 million is assumed to be deductible for tax purposes;
(e) funding facilities were used for 45 days and thereafter the proceeds of
the proposed rights offer amounting to R4 500 million were utilised to partially
settle the funding;
(f) depreciation written off on the buildings of Hirslanden was adjusted due
to revised accounting estimates of residual values on the assumption that the
maintenance policy is in line with Medi-Clinic`s policy;
(g) taxation has been taken into account on the adjustments at the applicable
tax rates.
3. For the purposes of NAV per share and TNAV per share it was assumed that:
(a) the transactions were effected on 31 March 2007;
(b) the balance sheet information of Hirslanden was extracted from its audited
financial statements for the year ended 31 December 2006;
(c) land and buildings within Hirslanden were revalued to fair value;
(d) deferred taxation liability at a rate of 22% was raised on the revaluation
surplus in respect of the land and buildings;
(e) existing debt within Hirslanden was refinanced by new debt on acquisition;
(f) Hirslanden`s balance sheet information was converted at R5.97:CHF1, being
the closing rate at 31 March 2007; and
(g) transaction costs of R262 million are assumed to have been paid on 31
March 2007 and have been either capitalised as part of the purchase
consideration, the cost of debt or written off against reserves depending on the
nature of the costs.
4. The number of shares in issue and the weighted number of shares have been
adjusted with the 198 675 497 shares issued at R22.65 in terms of the Rights
Offer.
5. Medi-Clinic`s inventories are valued on a first-in-first-out basis, whilst
Hirslanden valued inventories on a weighted average cost basis. It was
impractical to determine the effect of applying Medi-Clinic`s policy to
Hirslanden`s inventories. However, since management is of the opinion that the
effect should not be material, no adjustments have been made to Hirslanden`s
figures included in the pro forma financial information.
Presented below is the pro forma financial effect on HEPS assuming the optimal
permanent funding structure, post the refinancing of all the bridging facilities
within Hirslanden and Medi-Clinic, was in place from 1 April 2006:
Audited before the Pro forma Pro forma after the Percentage
Transactions adjustments Transactions change
HEPS (cents) 162.2 (71.1) 91.1 (43.9%)
7. Salient dates and times
The salient dates and times in respect of the Rights Offer are set out in the
table below.
Declaration data released on SENS: Friday, 26 October 2007
Declaration data published in the press: Monday, 29 October 2007
Last day to trade in Medi-Clinic shares in order to participate in the rights
offer (cum entitlement): Friday, 9 November 2007
Listing of and trading in the letters of allocation on the JSE commences at
09:00 on Monday, 12 November 2007
Medi-Clinic shares commence trading ex-rights on the JSE at 09:00 on Monday, 12
November 2007
Record date for the rights offer: Friday, 16 November 2007
Rights offer opens at 09:00 on Monday, 19 November 2007
Last day for trading letters of allocation on the JSE: Friday, 30 November 2007
Listing of rights offer shares and trading therein on the JSE commences: Monday,
3 December 2007
Rights offer closes at 12:00, on (see note 4) Friday, 7 December 2007
Record date for the letters of allocation: Friday, 7 December 2007
Rights offer shares issued and posted to holders of certificated shares on or
about Monday, 10 December 2007
Central Securities Depository Participant ("CSDP") or broker accounts in respect
of holders of dematerialised shares debited and updated with rights offer shares
on Monday, 10 December 2007
Results of rights offer announced on SENS: Monday, 10 December 2007
Results of rights offer published in the press: Tuesday, 11 December 2007
Issue new rights offer shares for excess applications (if applicable):
Wednesday, 12 December 2007
Refund cheques posted to holders of certificated shares, if applicable, in
respect of excess applications: Tuesday, 18 December 2007
Notes:
1. Share certificates in respect of Medi-Clinic shares may not be
dematerialised or rematerialised between Monday, 12 November 2007 and Friday, 16
November 2007, both days inclusive.
2. CSDPs effect payment on a delivery versus payment method in respect of
qualifying shareholders holding dematerialised shares.
3. If you are a qualifying shareholder holding dematerialised shares you are
required to notify your duly appointed CSDP or broker of your acceptance of the
Rights Offer in the manner and time stipulated in the custody agreement
governing the relationship between yourself and your CSDP or broker.
4. Unless otherwise indicated, all times are South African times.
Stellenbosch
26 October 2007
Financial advisor and transaction sponsor
The Standard Bank of South Africa Limited
Legal advisor
Hofmeyr Herbstein & Gihwala Inc.
Independent reporting accountants
PricewaterhouseCoopers Advisory Services (Proprietary) Limited
Lead independent sponsor
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
Date: 26/10/2007 16:32:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
