| Tue 30 Nov 2004, 15:07 | | AFROX TO INVEST 25% IN BIDCO |
|
African Oxygen Limited
Press Release
30 November 2004
REVISED TERMS FOR BEE TRANSACTION - AFROX TO INVEST 25% IN BIDCO
African Oxygen Limited (Afrox) today announced that it would replace Medi-Clinic
as the 25% shareholder in Bidco, the black empowerment consortium which has
agreed to purchase AHealth. In an agreement announced between Afrox, AHealth,
Bidco and MediClinic, MediClinic have agreed to terminate its involvement with
Bidco on all levels. The previous shareholders agreement and the disposal
agreement whereby MediClinic were to have acquired certain AHealth beds have
been cancelled with immediate effect.
All parties have worked together to find a solution to facilitate the
satisfactory outcome of the Bidco transaction. The revised proposal involves
the introduction of new BEE funders and the commitment by Afrox to invest in
Bidco. Bidco was incorporated solely for the purpose of acquiring the issued
share capital of AHealth. A consortium of Black Economic Empowerment investors
(`Beeco`), led by Brimstone (`Brimstone`) and Mvelaphanda Strategic Investments
(`Mvelaphanda`) will together, directly or indirectly, hold 75% of the ordinary
issued shares of Bidco; Afrox will hold the remaining 25%.
Afrox will distribute the net proceeds from the disposal of its 69% shareholding
in AHealth to its shareholders. In a separate transaction, on the operative date
of the Shareholder Scheme, Afrox will subscribe for further shares in, and
advance loans to Bidco in an amount of R 375 million.
Commenting on this revised deal, Afrox CEO Rick Hogben, said: `It became clear
to us that continued opposition to the deal could be protracted and would not be
in anyone`s interests. We have found a solution, acceptable to all parties,
which enables us to continue to pursue this landmark BEE transaction, which is
particularly important in the context of the anticipated Healthcare Charter.`
Hogben continued: `The healthcare business needs to be protected; this has been
a difficult period for all our staff and Doctors and we value their continued
hard work and loyalty. Afrox continues to believe that a deal which provides
AHealth with a BEE partner is a significant advantage in remaining competitive
and well-positioned to pursue new investment opportunities in the healthcare
sector, both locally and internationally. With the evolving South African
national healthcare system, an empowered AHealth will be ideally positioned for
growth and profitability.`
Any continued interference with the transaction can only be indicative of an
effort to interfere with black economic empowerment, as all others grounds for
objection have now been removed.
Commenting on the revised deal, Prof Jakes Gerwel, Chairman of Bidco and
Brimstone Investment Corporation said:
`All parties have worked steadily to find an acceptable solution. The provision
of funding is moving ahead as planned, and Bidco is hopeful of having all of the
issues pertaining to independent funding in place before the Tribunal reconvenes
in January 2005.`
Gerwel continued: `We look forward to working within the revised shareholding
structure. We welcome Afrox`s reinvestment as it facilitates the conclusion of
the transaction. It is also our intention to bring our supporting doctors in as
shareholders in AHealth, once this deal has been finalised and settled, in a
manner yet to be determined. It is important to us to have the interest and
support of our Doctors.`
Afrox`s original decision to dispose of its entire shareholding in AHealth, was
based on the fact that Afrox had derived substantial growth from AHealth and its
belief that the healthcare business had attained the requisite scale and level
of sophistication such that operating as an autonomous empowered entity would
enable it to pursue its own growth initiatives without restriction. Afrox
firmly believes this still holds true.
Afrox, AHealth and Bidco have also agreed to further extend the Merger Agreement
and the date for fulfillment of the Competition Condition in the Shareholder
Scheme and of the Shareholder Scheme Condition in the Employee Scheme to 23
January 2005. Provided that Bidco`s funding is in place by that date, there will
be a further extension to enable the Competition Tribunal to make its decision.
An application has been brought in the South African High Court by two
shareholders in AHealth to have the Scheme of Arrangement declared to have
lapsed. This application, which is being opposed, is currently due to be heard
in the week commencing 29 November 2004. The parties hope that following the
announcement of this revised transaction, the applicants will withdraw their
application.
Dr Jackie Mphafudi, Chairman of Mvelaphanda Strategic Investments, expects the
Competition Tribunal to approve the acquisition of Ahealth: `This new
arrangement brings no material change, other than significant empowerment
ownership, to the healthcare industry. With the Healthcare Charter that is in
the process of being formulated, this is a welcome development and a landmark
deal. Any possible intervening party will now only be trying to feather its own
nest.`
Hogben concluded, `I extend my appreciation to Bidco, Mediclinic and Afrox
stakeholders for their commitment to finding a workable solution for this deal.`
-ends-
For further information on Afrox please contact:
Brunswick (011) 268 5750
Rob Pinker 083 326 7794
Taryn Proksch 083 273 1301
For further information on Bidco please contact:
College Hill (011) 447 3030
Johannes van Niekerk 082 921 9110
