| Fri 21 Dec 2001, 0:00 | | Afrox Healthcare Limited - Offer By Afrox Hospital |
|
Indirect Shareholders Of Amahosp To Acquire Their Interests In Amahosp
Afrox Healthcare Limited
(Incorporated in the Republic of South Africa)
(Registration number 1985/001313/06)
Share code: AHH ISIN: ZAE000022059
("Afrox Healthcare")
Afrox Hospitals Limited ("Afrox Hospitals")
Amalgamated Hospitals Limited
(Incorporated in the Republic of South Africa)
(Registration number 1984/005063/06)
("Amahosp")
Amahosp Investments Limited ("Amahosp Investments")
Chatsmed Holdings Limited ("Chatsmed")
Durclin Limited ("Durclin")
Hiway Medical Centre Limited ("HMC")
Phoenix Hospital Properties Limited ("Phoenix")
OFFER BY AFROX HOSPITALS TO THE DIRECT AND INDIRECT SHAREHOLDERS OF AMAHOSP
TO ACQUIRE THEIR INTERESTS IN AMAHOSP
1. Introduction
Further to the joint cautionary announcements dated 14 June, 27 August, 5
September, 19 October and 4 December 2001, PricewaterhouseCoopers Corporate
Finance (Proprietary) Limited is authorised to announce that, subject to the
fulfilment of the suspensive conditions set out in paragraph 10 below, Afrox
Hospitals, a wholly-owned subsidiary of Afrox Healthcare, has made an offer
("the offer") to:
- Amahosp Investments, Chatsmed and Phoenix to acquire all of their shares
and linked loans in Amahosp;
- Durclin to acquire all of their shares and linked loans in Hiway Medical
Holdings (Proprietary) Limited ("HMH"), which is the holding company of HMC
and, in turn, Amahosp; and
- the minority shareholders in HMC ("the HMC minority shareholders") to
acquire all of their shares and linked loans in HMC.
2. Overview of AMASHOP
Amahosp is a privately-owned healthcare group which operates four modern
hospitals in the KwaZulu-Natal area having a total capacity of 673 beds. The
hospitals are Chatsmed Garden Hospital, The Crompton Hospital, Mount
Edgecombe Hospital and Westville Hospital. Amahosp also provides ancillary
healthcare services which include a 24-hour emergency rescue service,
operated by Amahosp Medical Rescue, and a 24-hour high-tech emergency and
casualty facility, situated at the Hillcrest Medical Centre.
Amahosp has three direct shareholder groups namely, Amahosp Investments
(0,4%), Chatsmed (32,0%) and Phoenix (8,0%) and three indirect shareholder
groups namely, Durclin (27,8%), HMC minority shareholders (11,5%) and Afrox
Healthcare (20,3%). Durclin controls Amahosp through the current
shareholding structure in place. Many of the direct and indirect
shareholders of Amahosp are healthcare professionals that either work in or
are associated with Amahosp's operations.
3. Details of the offer
Afrox Hospitals has made an equal offer to all of the direct and indirect
shareholders of Amahosp (collectively, "the Amahosp vendors"), which is
subject to the fulfilment of the suspensive conditions listed in paragraph
10 below, to acquire all of their shares and linked loans in Amahosp, HMC or
HMH, as the case may be, for a price equivalent to R5,45 per Amahosp share
and linked loan. Should all the direct and indirect shareholders accept the
offer, and on the assumption that the suspensive conditions to all of the
transactions are fulfilled, the total consideration payable by Afrox
Hospitals will amount to R135,2 million.
The directors of Amahosp Investments, Chatsmed, Durclin and Phoenix have
signed four separate Sale of Shares Agreements with Afrox Hospitals
regarding the disposals of their Amahosp interests in terms of the offer
("the disposals"). The shareholders of Amahosp Investments, Chatsmed,
Durclin and Phoenix are required to approve the disposals in terms of
section 228 of the Companies Act, 1973 (Act 61 of 1973), as amended, ("the
Act") by voting at a general meeting to be held on Wednesday, 30 January
2002.
The controlling shareholders of Durclin, holding 53,6% of its share capital,
have signed irrevocable undertakings to vote in favour of the section 228
resolution described above.
Should the suspensive conditions be fulfilled or be waived by Afrox
Hospitals, and HMC minority shareholders holding 90% or more of the shares
and linked loans accept the offer in terms of the circulars dated 21
December 2001, then Afrox Hospitals will invoke the provisions of section
440K of the Act to compulsorily acquire the remaining offer shares.
4. Settlement of the offer consideration
For those Amahosp vendors that accept the offer, Afrox Hospitals will settle
their purchase consideration in cash, which will be payable once all
suspensive conditions have been met.
First National Bank of Southern Africa Limited has confirmed to the
Securities Regulation Panel that Afrox Hospitals, through Afrox Healthcare,
has sufficient financial resources available to it to settle the maximum
consideration.
5. Rationale for the transaction
The objective of the transaction is to create a stronger and more
synergistic private healthcare group in the KwaZulu-Natal area by combining
the hospital assets of Amahosp with those of Afrox Healthcare. Afrox
Healthcare owns 100% of two hospitals in KwaZulu-Natal, Empangeni Garden
Clinic and Entabeni Hospital. In order to realise potential synergies, it is
envisaged that, following the implementation of the offer, the operations of
Amahosp, Empangeni and Entabeni will be merged into one company.
6. Voluntary winding-up
Subject to implementation of the disposals and on completion of the
distributions of the offer proceeds to relevant shareholders, Amahosp
Investments, Chatsmed, Durclin and Phoenix will be voluntarily wound-up.
7. Financial effects of the offer on the vendors
The table below sets out the pro forma financial effects of the disposal on
the audited financial results of the various Amahosp vendors for:
- in the case of Phoenix, the year ended 28 February 2001, had the disposal
been effected on 1 March 2000 for earnings purposes and on 28 February 2001
for net asset purposes; and
- in all other cases, the year ended 30 June 2001, had the disposal been
effected on 1 July 2000 for earnings purposes and on 30 June 2001 for net
asset purposes.
Before the After the Percentage
Disposal disposal change
Notes (cents) (cents)
Amahosp Investments
Earnings per share 1, 3 43,72 25,44 (41,8)
Net asset value
per share 2 550,20 550,20 -
Chatsmed
Earnings per share 1 6,17 31,21 405,9
Net asset value per
Share 2 572,98 572,98 -
Durclin
Earnings per share 1 14,99 57,04 280,5
Net asset value
per share 2 123,99 953,26 668,8
HMC minority
shareholders
Earnings per share 1 15,09 56,88 277,0
Net asset value
per share 2 953,27 953,27 -
Phoenix
Earnings per share 1 10,42 22,96 120,4
Net asset value
per share 2 467,43 467,21 -
Notes:
1. Interest, net of tax thereon at a rate of 30%, paid by the companies
on shareholders' loans was added back to net profit after tax to establish
earnings before the disposal for the purposes of the above calculation.
Earnings per share after the disposal was calculated on the basis that the
disposal proceeds were invested by the companies for the period at an after-
tax rate of 6%.
2. Shareholders' loans were included as equity and not as debt in the
calculation of net asset value.
3. The reason for the decline in earnings per share for Amahosp
Investments is that the company has previously been entitled to receive
guaranteed interest payments which were higher on a per share basis than
those received by other ordinary linked loan holders of Amahosp. These
rights to guaranteed interest payments have now fallen away and the last
such payment was made in October 2001.
8. Financial effects of the offer on Afrox Healthcare
The transaction will not have any immediate material effect on the earnings
or net asset values of Afrox Healthcare, but is expected to have a positive
effect in the medium to long term.
9. Opinions and recommendations
The respective boards of directors of Amahosp Investments, Chatsmed,
Durclin, HMC and Phoenix are of the opinion that the terms and conditions of
the disposal are fair and reasonable to the shareholders of each of the
companies and recommend that shareholders vote in favour of the ordinary
resolutions required to approve and implement the disposals.
They are further of the opinion that the voluntary winding-up referred to in
paragraph 6 above is in the best interest of the respective companies'
shareholders and recommend that shareholders vote in favour of the
resolutions necessary to approve and implement the liquidations.
KPMG, the independent adviser to the shareholders of Amahosp Investments,
Chatsmed, Durclin, HMC and Phoenix has provided an opinion that each of the
disposals is fair and reasonable.
10. Suspensive conditions
The offer is subject to the fulfilment of, inter alia, the following
conditions, which remain outstanding at the date of this announcement:
- shareholders of Durclin, in general meeting, passing the required section
228 resolution in terms of the Act authorising or ratifying the disposal of
its HMH shares and linked loans to Afrox Hospitals and the Durclin Sale of
Shares Agreement becoming unconditional in all respects. The controlling
shareholders of Durclin, holding 53,6% of its share capital, have signed
irrevocable undertakings to vote in favour of the section 228 resolution;
- various litigation matters between certain stakeholders within the Amahosp
group being irrevocably withdrawn; and
- a satisfactory review by Afrox Healthcare of the December 2001 accounts of
Amahosp to determine whether there have been any material changes in Amahosp
that adversely affect the value that was determined at due diligence date.
In addition to the above, for Amahosp Investments, Chatsmed and Phoenix, the
disposals of their Amahosp shares and linked loans are subject to their
shareholders, in general meeting, passing the required section 228
resolutions in terms of the Act authorising or ratifying such disposals.
Should any of Amahosp Investments, Chatsmed and Phoenix not approve the
disposals, the offer to the other parties will not be withdrawn.
The transaction has received unconditional approval from the Competition
Tribunal.
11. Salient dates and times
A general meeting of the shareholders of Amahosp Investments, Chatsmed,
Durclin and Phoenix is scheduled to be held at the Conference Centre,
Holiday Inn, Durban Elangeni, 63 Snell Parade, Durban at 20:30 for Amahosp
Investments and at 20:15 for the other companies on Wednesday, 30 January
2002 in order for shareholders to consider and if deemed fit, approve the
various resolutions required to implement the transaction. Details of other
salient dates and times are included in the circulars posted to shareholders
on 21 December 2001.
12. Documentation
Circulars containing full details of the transaction have been posted to
Amahosp Investments, Chatsmed, Durclin, HMC and Phoenix shareholders on 21
December 2001. Other pertinent information will be available for inspection
at the respective companies' registered offices.
Johannesburg
21 December 2001
Transaction adviser
PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
(Registration number 1970/003711/07)
Sponsor to Afrox Healthcare
Deutsche Securities
Member of the Deutsche Bank Group
Deutsche Securities (SA) (Proprietary) Limited
(Registration number 1995/011798/07)
Independent adviser to
vendors' shareholders
KPMG
Legal adviser to vendors
Garlicke & Bousfield Inc
Attorneys
