| Wed 1 Dec 2004, 16:39 | | Netpartner Makes Meaningful Progress In Developing |
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Refer to Director Dealings Announcement released earlier on SENS
Netcare/Netpartner - Netpartner Makes Meaningful Progress In Developing
Strategic Model
NETPARTNER INVESTMENTS LIMITED
(NETPARTNER)
and
NETWORK HEALTHCARE HOLDINGS LIMITED
(Registration number 1996/008242/06)
Code: NTC
ISIN number: ZAE000011953
(`Netcare`)
NETPARTNER MAKES MEANINGFUL PROGRESS IN DEVELOPING STRATEGIC MODEL
INTRODUCTION
The Board of Directors of Netpartner is pleased to announce that it has made
significant progress in establishing the organisation as a considerable
healthcare enterprise aimed at `Bringing Better Care to More People of South
Africa`.
On 15 November 2004, Netpartner announced the introduction of the South African
Medical and Dental Practitioners Association (`SAMDP`) into the organisation
through an equity investment as well as Board and management representation.
This transaction resulted in approximately 3 000 SAMDP-affiliated healthcare
providers from previously disadvantaged communities (`PDC`s`), becoming
purposefully involved in the future strategy of Netpartner and thereby placing
it in a meaningful position within the South African healthcare market. In
addition, the transaction increased the number of healthcare professionals as
shareholders in Netpartner to more than 10 000, with approximately 4 700 being
from PDC`s, who collectively own in the order of 23% of the issued shares in
Netpartner.
Having regard to the desire to have meaningful black equity ownership and
representation in Netpartner, Netpartner`s Board has been assessing various
strategic investments to further the establishment of its Health Maintenance
Organisation model where the interests of all parties are aligned to develop
more affordable healthcare products. One such initiative has been the stated
objective of attaining a strategic and meaningful stake in Netcare by
Netpartner.
Netpartner has previously indicated its desire to increase its shareholding in
Netcare for many months, and after several attempts through broker-led
initiatives to procure blocks of Netcare shares from other shareholders had
proved unsuccessful, an approach was made to Mr Michael Sacks (Sacks, the
Chairman of Netcare) and Dr Jack Shevel (Shevel, the CEO of Netcare).
Accordingly, following a debt raising programme to enable Netpartner to acquire
the desired blocks of shares, Netpartner has concluded the following
transactions:
- the acquisition of 44 million Netcare shares by way of an equity derivative
transaction (`the derivative transaction`), and
- the acquisition of 75 million shares from Sacks and Shevel (`the vendor
transaction`).
These transactions, together with the existing Netpartner interest of 125
million shares in Netcare (being 100 million shares acquired upon the formation
of Netpartner and 25 million acquired through the market since October 2003),
give Netpartner an equity interest in Netcare of more than 16%, thereby
contributing towards meeting certain objectives referred to below in regard to
the future strategy of Netpartner.
It is the intention of Netpartner to either acquire additional shares in
Netcare, or enter into voting pool arrangements with agreeable shareholders so
as to enable it to control the voting rights of more than 20% of Netcare`s
shares and thereby enable Netpartner to equity account its share of Netcare`s
earnings.
STRATEGIC RATIONALE FOR THE TRANSACTIONS
Further to the compelling factors referred to in the introduction, Netpartner`s
strategic stake in Netcare will enhance its ability to facilitate the delivery
of high quality affordable healthcare. By having access to the healthcare
services provided by Netcare and other providers, the national networks of
private hospitals and the comprehensive supply chain of specialised and
associated services, Netpartner, will be able to share in the benefits of its
models aimed at growing the medically insured population. In addition, this will
avail those scheme members who contract with Netpartner of the most
comprehensive range of healthcare services and technologies presently available
in South Africa.
The Netpartner interest in Netcare will:
- make Netpartner the largest single shareholder in Netcare;
- give Netpartner the benefits which flow from having a strategic investment
in Netcare, including the eventual ability to equity account Netcare`s earnings
and thereby further facilitate its listing on the Alt-X in the first half of
2005.
TERMS OF THE SHARE ACQUISITIONS
1- The Derivative transaction
Netpartner, through a derivative zero cost collar contract with a financial
institution, acquired 44 million Netcare shares. The zero cost collar enabled
Netpartner to raise efficient debt funding to purchase these shares.
2- The Vendor transaction
In terms of the agreement between Netpartner and Sacks and Shevel, Netpartner
has acquired 75 million shares in Netcare from Sacks and Shevel at a purchase
price of 540 cents per Netcare share.
In order to fund the acquisition, Netpartner secured loan facilities from its
bankers and has obtained vendor finance from Sacks and Shevel. Of the aggregate
purchase price of R 405 million, R 380 million is payable in cash and R 25
million is being funded by loans to Netpartner by Sacks and Shevel (`the Vendor
Loans`). The Vendor Loans bear interest at a fixed rate of 7% and are repayable
on or before 1 October 2006.
Importantly, this transaction, together with the Netpartner/SAMDP transaction
that was announced recently, also enables Netcare to achieve a number of its
objectives:
- Strategically align Netcare with a broader network of over 10 000 medical
professionals;
- Given the significant BEE shareholding in Netpartner, increasing the
indirect BEE shareholding in Netcare;
- Expands Netcare`s role and footprint as part of a health maintenance
organisation;
- As a result of the indirect buyback benefit through Netcare`s cross
shareholding in Netpartner, the transactions, (on a pro forma basis using the
results for the year ending 30 September 2004), will have a positive yet
insignificant effect on the Headline EPS, Attributable EPS, net asset value and
tangible net asset value per Netcare share.
The shareholder profile of Netpartner after the transactions referred to above,
which notably includes more than 7 244 general practitioners, 1 446 specialists,
549 dentists and 1 533 other healthcare professionals (many of whom are from
PDC`s), is made up as follows:
Netcare 48.4%
Total PDI shareholding 23.3%
SAMDP 9.0%
Community Healthcare Holdings 4.1%
Other PDI shareholders 10.2%
Other Public shareholders 28.3%
100.0%
Following the transaction, Shevel and Sacks will have the following beneficial
and non-beneficial interests in Netcare shares:
Shares in Netcare % interest
Dr J Shevel 46.8 million 3.3%
M I Sacks 28.5 million 2.0%
THE FINANCIAL EFFECTS FOR NETPARTNER
The financial effects for Netpartner on a pro forma basis, using the audited
figures for the year ending 30 September 2004, assuming the SAMDP investment in
50 million Netpartner shares, the acquisition of the Netcare shares, and the
ability to equity account the percentage shareholding of the Netcare earnings
had the transactions referred to been effected on 1 October 2003, are that
Headline EPS would increase from (0.12) cents per Netpartner share to,
approximately 11,0 to 12,0 cents per share. (The effect on net asset value and
tangible net asset value, using market valuations at the time of this
announcement, would not be material.)
CONCLUSION
Following the progress made by both Netcare and Netpartner in effecting
meaningful transformation in the healthcare industry, both are confident that:
- solid foundations have been established to further develop the significant
national asset that the private healthcare industry represents in the South
African economy;
- the flexible integrated healthcare delivery model, which has been developed
with the interests of providers aligned towards making quality healthcare more
affordable, will result in a marked increase in the number of insured lives;
- the uncertainties experienced by medical professionals, following
significant changes to the healthcare environment, will be mitigated by being
part of a sustainable HMO model;
- the facilitation of the transaction by the original founders of Netcare,
resulting in meaningful transformation in the private healthcare enterprises of
Netcare and Netpartner, together with their continued significant investment and
support, is a pivotal step in the strategic future of these businesses;
- the meaningful BEE and investment transactions referred to in this
announcement should assist the proposed AltX listing of Netpartner in 2005,
thereby enhancing the prospects of creating further stakeholder value creation;
and
- the material BEE shareholdings and participation in both Netcare and
Netpartner, as two of South Africa`s prominent private healthcare enterprises,
bodes well for bringing better care to more people.
Given the dynamic nature of both Netcare and Netpartner in particular, and the
healthcare industry in general, further announcements will be made in due course
regarding the progress of the aforementioned initiatives.
NETWORK HEALTHCARE HOLDINGS LIMITED
(Registration number 1996/008242/06)
Code: NTC
ISIN number: ZAE000011953
(`Netcare`)
DEALINGS IN SECURITIES BY DIRECTORS
With reference to the attached announcement relating to a transaction by
Netpartner, in terms of paragraph 3.63 - 3.65 of the Listings Requirements of
the JSE Securities Exchange South Africa, the following information is
disclosed:
NAME OF DIRECTOR M I Sacks
DATE OF TRANSACTION 1 December 2004
NUMBER OF SHARES 26 785 714
CLASS OF SECURITY Ordinary
NATURE OF TRANSACTION Disposal in terms of attached
announcement
PRICE PER SHARE 540 cents
NATURE OF INTEREST Indirect and non-beneficial
NAME OF DIRECTOR Dr J Shevel
DATE OF TRANSACTION 1 December 2004
NUMBER OF SHARES 48 214 286
CLASS OF SECURITY Ordinary
NATURE OF TRANSACTION Disposal in terms of attached
announcement
PRICE PER SHARE 540 cents
NATURE OF INTEREST Indirect and non-beneficial
Prior written approval in terms of paragraph 3.66 of the JSE Securities Exchange
South Africa Listings Requirements has been obtained.
In compliance with the requirements of Section 3.63 of the JSE Listings
Requirements, the under-mentioned Directors of Network Healthcare Holdings
Limited will, as a result of the aforementioned transaction, derive an indirect
beneficial interest in the ordinary shares of Network Healthcare Holdings
Limited, acquired by Netpartner Investments Limited, as contemplated in
paragraph (a)(iv) of the aforementioned section -
Name of Director Number of Ordinary Shares
Dr J Shevel 411,807
Mr M I Sacks 308,856
Mrs I M Davis 68,631
Mr N Weltman 34,317
Dr R H Friedland 34,317
Dr J A van Rooyen 20,590
Dr I Kadish 14,286
Mr P J Lindeque 11,863
Mr R H Bush 6,863
Total number of ordinary 911,530
shares acquired
Date of transaction 1 December 2004
Nature of transaction Acquisition by Netpartner
Investments Ltd
Price per share 540c
Total value of ordinary R4,922,268
shares acquired
Prior written approval in terms of paragraph 3.66 of the JSE Securities Exchange
South Africa Listings Requirements has been obtained.
JOEL WOLPERT
Company Secretary
Tel No : (011) 301-0213
Fax No : (011) 301-0481
E-mail jwolpert@ho.netcare.co.za
Sponsor
Merrill Lynch South Africa (Pty) Limited
