| Wed 22 Oct 2003, 16:05 | | Announcement - Netpartner Investments |
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Network Healthcare Holdings Limited - Announcement - Netpartner Investments
Limited
Network Healthcare Holdings Limited Netpartner Investments Ltd
("Netcare") ("Netpartner")
Incorporated in the Incorporated in the
Republic of South Africa Republic of South Africa
Reg. number 1996/008242/06 Reg. number 2003/014215/06
JSE Share code: NTC
ISIN Code: ZAE00011953
ANNOUNCEMENT - NETPARTNER INVESTMENTS LIMITED
Introduction
Further to the announcement issued by Netcare and the South African Managed Care
Co-Operative ("SAMCC") on 24 July 2003, the following represents an update as to
the status of the Netpartner initiative.
2. Results of the Private Placing
The Board of Netpartner is pleased to announce that the private placement of
Netpartner shares was oversubscribed resulting in the issue of the maximum
subscription level of R 450 million. This is 50% more than the expected R 300
million level of capitalisation.
The most encouraging aspect is the clear vote of confidence and support from
healthcare professionals for this initiative. The number of shareholders exceed
6 100, with the profile including approximately:
- 3 940 General Practitioners and Specialists;
- 2 160 Dentists, Pharmacists, Optometrists and other.
As a further vote of confidence Netcare Executives and Management have also
subscribed for Netpartner shares in the order of 5%.
3. Netpartner Strategy
As at 30 September 2003 Netpartner had completed Phase I of its strategy by
exceeding the anticipated capitalisation levels and acquiring the two planned
portfolio investments, being 20% of the shares in and claims on loan account
against Medicross Healthcare Group Pty Limited ("Medicross") for R50 million and
the subscription of 100 million Netcare shares for a total consideration of R274
million.
Netpartner is now favourably poised to enter Phase II of its intended strategy
having assets worth more than R600 million (including cash resources of over
R100 million). This equates to a net asset value in excess of 135 cents per
Netpartner share based on the market value of its investments as at the date of
this announcement.
Phase II of Netpartner"s operating model includes the development of The Network
Company, a managed care enterprise whose principal objective is to facilitate
and administer managed healthcare products and services to be offered to members
of medical aid Schemes. The Network Company will, in addition, promote
innovative healthcare solutions for the delivery of quality and cost-effective
managed care to the broader Southern African community.
The Network Company will initially focus on primary care capitated products for
new low income earners, with no medical aid cover, employed by corporates who
are seeking to foster equity within the workplace, as well as existing scheme
members.
The Network Company aims to become the country"s lowest cost provider of quality
healthcare. It is expected that new insured lives from emerging communities are
likely to be attracted to this accessible and affordable healthcare delivery
model which will be available in the New Year.
The potential of this initiative is enhanced by various Independent
Practitioners Associations ("IPAs") (DFPA, Faranani, GP Net, NIMPA, SAMDP)
which, together with the SAMCC, have over 8 000 affiliated GP"s on a national
basis who will augment the network offering.
In addition, Netpartner has identified various strategic investments in selected
healthcare businesses to bolster its administrative ability and establish a
clinical trials company.
4. Black Economic Empowerment ("BEE")
It is estimated that more than 2 000 of Netpartner"s initial subscribers are
from previously disadvantaged communities which, together with other BEE groups
presently engaged in securing further investment funding, will result in more
than 25% of Netpartner"s equity being owned by BEE shareholders.
The Board of Netpartner is currently considering proposals from these and other
BEE investors to enable them to acquire an additional interest in Netpartner,
thereby strengthening Netpartner"s position as the broadest BEE based healthcare
company serving all communities in South Africa ("SA").
5. Board of Directors appointments
The following eminent professionals have been appointed as non-executive
directors to the board of Netpartner and will add enormous value to Netpartner:
- Dr Barry Kistnasamy, the Dean of the Faculty of the Nelson
Mandela School of Medicine, Kwa Zulu-Natal. Dr Kistnasamy is a specialist in
community health with further training in Health Economics and Planning (York
University, UK) and Environmental & Occupational Health (University of Michigan,
USA).
- Mrs Ina Wilken, the vice-chairperson of the South African
National Consumer Union ("SANCU"). Given Netpartner"s objectives and in order to
represent consumers" interests at the highest level, SANCU has accepted a seat
on the Board of Netpartner to represent the best interests of consumers and
to ensure best practice and quality at all times.
In addition to the aforementioned,
- Dr Moshabi Lazarus Malete has been appointed, as the SAMCC
designate, to the Board of Medicross. Dr Malete is the vice Chairperson of the
ODI IPA and a member of the SAMCC Management Committee.
- the Health Professions Council of South Africa will have
observer status at Netpartner Board meetings, and
- it is intended to appoint further independent non-
executive directors in due course to complement the existing Netpartner Board
representation and enhance the company"s corporate governance.
6. Netpartner Foundation
Netpartner"s Corporate and Social responsibility endeavours include the
incorporation of The Netpartner Foundation, a section 21 company, formed for
purposes of separately procuring and applying funds for, inter alia, various
health awareness and education initiatives; programmes to assist in dealing with
the HIV/AIDS pandemic and the establishment of and support for community
healthcare centres. Netpartner has approved an initial contribution to the
Netpartner Foundation of R1 million to facilitate the commencement of its
mandate.
7. Trading of Netpartner shares by the public
A suitable over-the-counter ("OTC") market has been established with Barnard
Jacobs Mellet Private Client Services (Proprietary) Limited ("BJM") to
facilitate trade in Netpartner shares by the public.
Given the unexpected overwhelming response to this private placing and the
voluminous communication and administrative logistical requirements, BJM have
advised that trading on the OTC commence on Monday, 27 October 2003 in the
interests of creating as fair a market as possible and allowing all shareholders
an equal opportunity to start the OTC market on a fair footing.
BJM have indicated that the interest in Netpartner by parties who were not
original placees to the Prospectus has been significant, and this, together with
the nature of Netpartner"s investments and its credible strategy, makes for a
successful OTC market.
In addition, as the level of shareholders and funds raised exceeded
expectations, the company is well positioned to apply for an introduction to the
JSE Securities Exchange South Africa ("JSE") or its Alternative Exchange
("AltX"), subject to the requisite Netpartner board approval being obtained,
Netpartner meeting the Listings Requirements of the JSE or the AltX, and
sufficiently favourable market conditions prevailing at the time.
8. Netcare and Netpartner
It has always been Netcare"s stated strategy to develop an integrated healthcare
platform and to be the lowest cost provider of quality healthcare. Given that
the current fee-for-service model, which provides cover for those fortunate
enough to afford it, has unsustainable elements, Netcare is committed to
developing strategies to change this reimbursive system. Netpartner is seen as
key to achieving this end with the overall objective of ensuring that private
healthcare will be more sustainable, affordable and accessible, while offering
the new SA a new healthcare solution.
The establishment of Netpartner heralds a new era for healthcare in SA and its
success will certainly;
- provide a meaningful basis for increasing the number of
insured lives;
- offer a comprehensive solution for those Public Sector
employees who are currently uninsured,
- and most importantly, be a positive advance in retaining
quality healthcare professionals in our country.
Given the level of subscription, the Board of Netpartner elected to acquire the
full agreed number of Netcare shares which was satisfied through a new issue of
shares for cash by Netcare. This resulted in Netcare receiving a net R106
million after investing R218 million for its 48% interest in Netpartner. These
funds have been applied by Netcare to reduce Group debt levels.
The financial effects of these transactions to Netcare are not material on a pro
forma basis. However, a successful implementation of the provider network, as
well as the potential returns from Netcare"s investment in Netpartner should
impact positively on the Netcare Group in future.
The success of the first phase of Netpartners" establishment bears testimony to
the support by healthcare professionals to the primary objective of Netpartner
of bringing "BETTER CARE TO MORE PEOPLE".
Further announcements regarding the status of Netpartner will be published from
time to time.
Sandton
22 October 2003
Sponsor to Netcare
Merrill Lynch South Africa (Pty) Limited
Investment Bank and Corporate Advisors to Netpartner
Nedbank
Specialist Banker
Imperial Bank Limited
Attorneys
HR Levin
Reporting Accountants
Fisher Hoffman PKF (Jhb) Inc
Date: 22/10/2003 03:30:10 PM Produced by the JSE SENS Department
