| Tue 18 May 2010, 7:05 | | LHC - Life Healthcare Group Holdings Limited - Abridged pre-listing statement |
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JSE
LHC
LHC - Life Healthcare Group Holdings Limited - Abridged pre-listing statement
Life Healthcare Group Holdings Limited
(formerly Life Healthcare Group Holdings (Proprietary) Limited)
(incorporated in the Republic of South Africa)
(Registration number 2003/002733/06)
JSE share code: LHC ISIN: ZAE000145892
("Life" or the "Company" or the "Issuer")
Not for distribution in the United States, Canada, Japan or Australia.
ABRIDGED PRE-LISTING STATEMENT
Abridged pre-listing statement relating to the listing of Life on the Main
Board of the securities exchange operated by the JSE Limited ("JSE") with
effect from the commencement of business on Tuesday, 8 June 2010. The
information in this abridged pre-listing statement has been extracted from
the detailed pre-listing statement issued by Life, on Tuesday, 18 May 2010.
This abridged pre-listing statement is not an invitation to the public to
subscribe for shares in Life, but is issued in compliance with the Listings
Requirements of the JSE for the purpose of providing information to the
public with regards to Life.
1. Introduction and Offer particulars
On 21 April 2010 resolutions were passed by the board of directors of Life
(the "board") in respect of an offer for subscription by Life, a repurchase
from and an offer for sale by, certain of the Company`s existing shareholders
("Selling Shareholders"), subject to certain conditions (the "Offer"), to
institutional investors in South Africa and to selected institutional
investors in other jurisdictions, and, by invitation, to employees and
management of Life and selected doctors in South Africa, to whom the Offer
will specifically be addressed (the "Applicants"), of 431,338,800 ordinary
shares having a par value of R0.000001 each in the share capital of the
Company (the "Offer Shares"), pursuant to which the Company would list on the
Main Board of the JSE (the "Listing"). The Offer Shares are comprised of
321,547,006 new ordinary shares to be issued by Life ("the Subscription
Shares") and 109,791,794 existing ordinary shares to be sold by certain of
the shareholders ("the Sale Shares").
A further 41,688,389 ordinary shares (the "Overallotment Shares") may be sold
by certain of the Selling Shareholders pursuant to a 30-day option which
those Selling Shareholders have agreed, subject to certain conditions, to
grant to the joint-global coordinators and joint-bookrunners for the Offer
(the "Joint-Bookrunners") for the purpose of covering short positions
resulting from overallotments or from sales of Offer Shares on or before the
end of the Stabilisation Period (the period commencing on the date of Listing
and ending 30 days thereafter).
In order to ensure that a significant portion of the Offer Shares shall be
new ordinary shares in the capital of the Company, the Company shall
repurchase, immediately after the allotment and issue of the Subscription
Shares, issued ordinary shares in its capital equivalent in number to the
Subscription Shares. The Company has entered into agreements (the "Repurchase
Agreements"), as of 14 May 2010, with the Selling Shareholders pursuant to
which it will effect the share repurchase ("Share Repurchase").
The Offer is subject to a minimum aggregate subscription or sale of 41.39% of
the issued share capital of the Company and achieving the JSE free float and
shareholder spread requirements. The Listing will not proceed if the minimum
subscription and sale are not achieved or the JSE free float and shareholder
spread requirements are not met, and any acceptance of the Offer shall not
take effect and no person shall have any claim whatsoever against the Issuer,
the Selling Shareholders, the managers or any other person as a result of the
failure of any condition. The Issuer will use the proceeds from the issue of
the Subscription Shares to discharge the consideration payable by it for the
Share Repurchase, including the South African secondary tax on companies
("STC"), South African securities transfer tax ("STT") and other costs
attending thereto. The Issuer will not receive any of the proceeds from the
sale of the Sale Shares. Applicants will only be allowed to apply for shares
for an amount of no less than R100,000 (excluding invited employees, managers
and doctors, who may subscribe for less through a specified registered
stockbroker).
Subject to the fulfilment of the above conditions, 1,042,209,750 fully paid
Life ordinary shares of a par value of R0.000001 each (being the entire
issued share capital of the Issuer) will be listed on the Main Board of the
JSE in the "Health Care Providers" sector under the abbreviated name
"LifeHC", share code "LHC" and ISIN ZAE000145892, with effect from the
commencement of business on Tuesday, 8 June 2010.
All shares (including any Offer Shares) that are in issue as at the date of
Listing will rank pari passu in all respects.
2. Overview of the business of Life
Life is one of the leading private hospital operators in South Africa. Life
primarily serves the market for privately insured individuals, representing
approximately eight million people. In the 2008 calendar year, the privately
insured market represented healthcare expenditures of approximately R64.7
billion (excluding patients` out-of-pocket expenditures and administrative
expenditures). The South African private healthcare market is attractive due
to a number of factors including high barriers to entry in the private
hospital sector; a growing middle class resulting in a growing privately
insured population; a high and increasing disease burden in the country; an
ageing privately insured population; and an under-resourced public sector
healthcare system.
Life has more than 25 years experience operating private hospitals in South
Africa. Commencing operations in the early 1980s with its first four
hospitals, Life has grown through acquisitions, capacity expansion within
existing facilities, the addition of new lines of business, and development
and construction of hospitals. The Group was listed on the JSE in 1999, and
subsequently taken private in 2005 by a consortium led by Brimstone
Investment Corporation Limited and Mvelaphanda Group Limited, together with
Life`s senior management.
Life is primarily a provider of acute care, high technology private hospital
services. Life`s diversified healthcare business is organised into two
divisions:
- Hospitals Division, which represented 92% of Life`s revenues for the 2009
financial year, and includes Life`s core acute care hospital business,
comprising general hospital facilities of various sizes that include
intensive care units (ICUs), high care units (HCUs), operating theatres,
emergency units, maternity units and cardiac units, as well as specialised
facilities that provide either inpatient or outpatient services in the areas
of acute rehabilitation, chronic renal dialysis, mental healthcare services
and radiation and chemotherapy oncology; and
- Healthcare Services Division, which represented 8% of Life`s revenues for
the 2009 financial year, and includes the provision of acute and long-term
chronic hospitalisation services to state patients through Life Esidimeni, as
well as the provision of primary and occupational healthcare through Life
Occupational Health.
Life has a long track record of operational excellence and strong financial
results. During the financial years ended 30 September 2007, 2008 and 2009,
Life recorded revenue of R6,548.4 million, R7,329.3 million and R7,929.7
million, respectively, with a compound annual growth rate over the period of
10.0%. During the financial years ended 30 September 2007, 2008 and 2009,
Life recorded Adjusted EBITDA (net income before interest, taxes,
depreciation and amortisation, profit on disposal of businesses and
profit/loss on post retirement benefits) of R1,451.6 million, R1,733.5
million and R1,893.0 million, respectively, with a compound annual growth
rate over the period of 14.2%. During the six months ended 31 March 2009 and
31 March 2010, Life recorded revenue of R3,776.0 million and R4,185.8
million, respectively, and Adjusted EBITDA of R864.9 million and R982.0
million, respectively.
Life has an extensive geographic network of diverse facilities, including
hospitals across seven of South Africa`s nine provinces and in the country`s
most populous metropolitan areas. Life operates a range of facilities adapted
to meet the local demand in the various regions of the country, including
complex, multi-disciplinary hospitals, community hospitals and specialised
stand-alone facilities to provide the appropriate scale and scope of
healthcare services.
3. Competitive strengths
Life operates within the attractive South African private healthcare market,
and is well positioned in this market as a result of the following key
strengths:
- leading market position;
-geographically extensive network of facilities;
- solid track record of operational excellence;
- well established relationships with private insurance providers;
- strong relationships with doctors;
- track record of successfully managing growth;
- highly qualified and incentivised nurses, pharmacists and staff; and
- experienced and dedicated management team.
4. Business strategy and prospects
The goals of Life are to continue providing high quality, cost effective
healthcare in South Africa, and to become a leading private hospital operator
in other selected emerging markets. In order to achieve these goals, Life
seeks to implement the following key strategies:
- Exploit the breadth and depth of Life`s existing hospital network
- Life has detailed plans to grow the capacity of its existing facilities
in order to meet increased demand and enhance the profitability and
competitiveness of these facilities
- Expand its coverage and penetration of the South African market
- Life plans to expand the geographic reach of its coverage within South
Africa in the acute care hospital sector in order to meet the increasing
demand for private healthcare in South Africa
- Position Life for international expansion
- Life plans to take advantage of opportunities to expand within its
existing lines of business in selected attractive emerging markets which
display similar characteristics to those experienced historically in South
Africa
- Continue to enhance operational efficiencies
- Life plans to take advantage of it`s growth to leverage it`s fixed cost
base and continue to improve margins through a continued focus on driving
efficiencies
- Ongoing partnership with government and engagement with healthcare reform
in South Africa
- Life plans to leverage its position as the leading South African operator
of hospital public private partnerships in connection with future
opportunities to provide services to government
5. Directors
The names, ages and business addresses of the directors of Life as at the
date of Listing are set out below:
Name Business Address
Non-executive directors
Prof Gert Johannes Gerwel (64) 3rd Floor, Mandela Rhodes Building
(Chairman) 150 St Georges Mall,
Cape Town, 8001
South Africa
Mr Mustaq Brey (55) No 1 Mariendahl Lane
Boundary Terraces
First Floor, Slade House
Newlands
Cape Town, 7700
South Africa
Ms Yolanda Cuba (32) Hunts End, 36 Wierda Road West
Weirda Valley
Sandton, 2196
South Africa
Mr Eutychus Mbuthia (42) 1 Merchant Place
Corner Fredman Drive and Rivonia
Road
Sandton, 2196
South Africa
Dr Peter Ngatane (55)* 20 Nembula House, Lesedi Clinic
Chris Hani Road
Diepkloof
Soweto, 1862
South Africa
Ms Neo Sowazi (49) Industrial Development Corporation
19 Fredman Drive
Sandown
Sandton, 2146
South Africa
Mr Garth Solomon (43) Old Mutual Investment Group
Jan Smuts Drive
Pinelands
Cape Town, 7405
South Africa
Dr Paul Dalmeyer (60) The Stable
St. George`s Hospital
Port Elizabeth, 6001
South Africa
Ms Louisa Mojela (51)* 22 Central Street
Houghton
Johannesburg, 2198
South Africa
Mr Peter Golesworthy (52)* 6 Thorne Close
Constantia
Cape Town, 7806
South Africa
Mr Trevor Munday (60)* 27 Angus Road
Bryanston
Sandton, 2196
South Africa
Executive directors
Mr Michael Flemming (53) 21 Chaplin Road
(Chief Executive Officer) Illovo
Johannesburg, 2196
South Africa
Mr. Roger Hogarth (56) 21 Chaplin Road
(Financial Director) Illovo
Johannesburg, 2196
South Africa
Notes:
* Independent director
6. Salient dates and times
2010
Opening date of the Offer at 09:00 on Tuesday, 18 May
Publication of the pre-listing statement Tuesday, 18 May
Last date for indication of interest for the Wednesday, 2 June
purpose of the bookbuild at 17:00 on
Expected closing of the Offer at 17:00 on Wednesday, 2 June
Offer price released on SENS Thursday, 3 June
Offer price published in the press Friday, 4 June
Settlement and proposed listing date on the JSE Tuesday, 8 June
7. Share capital
At the date of Listing, the authorised share capital of the Company will be
comprised of 4,149,980,000 ordinary shares, having a par value of R0.000001
each, and the entire issued share capital will be 1,042,209,750 fully paid
ordinary shares. There will be no other class of shares authorised or in
issue in the capital of the Company at the date of Listing. The Company`s
total share premium at the date of Listing will be R4,019,798,144.
8. Copies of the pre-listing statement
This pre-listing statement is only available in English and copies thereof
may be obtained (by persons invited to participate in the Offer) during
normal business hours from Tuesday, 18 May 2010 until Wednesday, 2 June 2010
from the Issuer, Rand Merchant Bank, a division of FirstRand Bank Limited
("RMB") and Computershare Investor Services (Proprietary) Limited, at their
respective physical addresses which are set out below:
The registered office of Life: The office of RMB:
21 Chaplin Road 1 Merchant Place
Illovo Corner Fredman Drive and
Johannesburg Rivonia Road
2196 Sandton
South Africa Johannesburg
2196
South Africa
The office of Computershare
Investor Services(Proprietary)
Limited
Ground Floor
70 Marshall Street
Johannesburg
2001
South Africa
Johannesburg
18 May 2010
Joint bookrunners and managers
Credit Suisse Securities (Europe) Limited
Morgan Stanley & Co. International plc
Rand Merchant Bank, a division of FirstRand Bank Limited
Structuring adviser, transaction sponsor and stabilisation manager
Rand Merchant Bank, a division of FirstRand Bank Limited
Attorneys
Webber Wentzel, SA attorneys to the Company
White & Case LLP, US & UK attorneys to the Company
Cliffe Dekker Hofmeyr Inc, SA attorneys to the Joint bookrunners and managers
Freshfields Bruckhaus Deringer LLP, US & UK attorneys to the Joint
bookrunners and managers
Reporting accountants and auditors
PricewaterhouseCoopers Inc
Financial communications adviser
College Hill (Proprietary) Limited
This document does not constitute an offer of securities for sale in the
United States. Securities may not be offered or sold in the United States
absent registration or an exemption from registration under the U.S.
Securities Act of 1933, as amended (the "Securities Act"). The securities
being offered have not and will not be registered under the Securities Act.
There will be no public offering in the United States.
This document does not constitute an offer of securities to the public in the
United Kingdom. This document is directed only at (i) persons who are outside
the United Kingdom or (ii) persons who have professional experience in
matters relating to investments falling within Article 19(1) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"),
(iii) high net worth entities falling within Article 49(2) of the Order and
(iv) other persons to whom it may lawfully be communicated (all such persons
together being referred to as "relevant persons"). Any investment activity
to which this communication relates will only be available to, and will only
be engaged with, relevant persons. Any person who is not a relevant person
should not act or rely on this document or any of its contents.
Any offer of securities to the public that may be deemed to be made pursuant
to this communication in any EEA Member State that has implemented Directive
2003/71/EC (together with any applicable implementing measures in any Member
State, the "Prospectus Directive") is only addressed to qualified investors
in that Member State within the meaning of the Prospectus Directive.
Copies of this announcement are not being made and may not be distributed or
sent into the United States, Canada, Japan or Australia.
Date: 18/05/2010 07:05:36 Produced by the JSE SENS Department.
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