| Mon 26 Jul 2004, 8:46 | | Ahealth secrets in Medi-Clinic files |
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Ahealth secrets in Medi-Clinic files
July 26, 2004
By Wiseman Khuzwayo
Johannesburg - Confidential information on Afrox Healthcare (Ahealth), the company being bought by competitor Medi-Clinic and two empowerment partners, made its way into Medi-Clinic files during the bidding process, Medi-Clinic financial director Gerhard Swiegers said on Friday.
Taking the stand at the competition tribunal`s hearing into the deal, Swiegers said this had been discovered after a due diligence investigation by PricewaterhouseCoopers that had been commissioned by African Oxygen (Afrox), Ahealth`s parent company.
Bidco, headed by former director-general in the presidency Jakes Gerwel, is trying to buy Ahealth for R3.1 billion. The consortium comprises Medi-Clinic, Mvelaphanda Strategic Investments and Brimstone Investments.
It had been agreed between Bidco and Afrox that sensitive information from the due diligence would first be sanitised by Afrox before it was passed on to Medi-Clinic.
Swiegers said Medi-Clinic had, upon discovering the unsanitised information, launched an investigation to discover how the document had made its way into its files but it had uncovered nothing.
The document had contained information about the profitability of each hospital owned by Ahealth, including the most profitable ones.
Swiegers told the tribunal that he had no idea how the information had found its way into the files and that Medi-Clinic had had no intention of using the information nor, in fact, had it used it.
Although a minority shareholder in the consortium, with a 25 percent stake, Medi-Clinic has made it very clear that it wants to acquire 2 500 of Ahealth`s hospital beds.
Senior advocate David Unterhalter, who represents opponents of the deal, including Medi-Clinic`s competitors Netcare and Clinix, pointed out to Swiegers that the list of Ahealth`s most profitable hospitals was exactly the same as those on the list on the hospital disposal agreement, which governed which hospitals Medi-Clinic would buy from Bidco.
When asked to explain, Swiegers said he did not know how that happened but said that Medi-Clinic had spent millions preparing the bid, including engaging the international bank, NM Rothschild, as its financial advisers.
Rothschild subsequently became adviser to Bidco, apparently on the strength of a verbal agreement.
Unterhalter also took Swiegers to task for a letter written to Brimstone by the East London Doctors` Company (ELDC), which is opposing the deal.
The letter asked whether Bidco had reached an agreement with Afrox to take over Ahealth.
In a replying letter from Bidco`s lawyers, Hofmeyer Herbstein & Gihwala, the ELDC was told that no such agreement existed.
Unterhalter contended that this was misleading because the agreement was already in place.
The tribunal will sit tomorrow and then will adjourn to September 15.
