LIFE HEALTHCARE GROUP HOLDINGS LIMITED - Disposal of interest in Max Healthcare Institute Limited and withdrawal of cautionary announcement

Disposal of interest in Max Healthcare Institute Limited and withdrawal of cautionary announcement

Life Healthcare Group Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 2003/002733/06
ISIN: ZAE000145892
Share Code: LHC
("Life Healthcare" or "the Company")


DISPOSAL OF INTEREST IN MAX HEALTHCARE INSTITUTE LIMITED AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT


1.   INTRODUCTION

     Further to the cautionary announcement released on the Stock Exchange News Service on 27
     August 2018, shareholders are advised that the Company through its wholly owned subsidiary,
     Life Healthcare International Proprietary Limited, has accepted an offer from the global
     investment firm Kohlberg Kravis Roberts & Co. LP. for and on behalf of funds and/or investment
     vehicles managed by it together with its affiliates ("the Purchaser") to acquire its 49.7% stake in
     Max Healthcare Institute Limited ("Max Healthcare") ("the Transaction"). The Purchaser may
     complete the transaction through its portfolio company, Radiant Life Care Private Limited.

2.   THE TRANSACTION

     Rationale

     Exiting its joint shareholding investment in Max Healthcare will further enable Life Healthcare
     to focus on its core operations in South Africa, UK, Poland and Western Europe. The Company
     will initially use the net disposal proceeds to settle debt as well as to invest in growth
     opportunities in its core markets.


     Terms of the Transaction

     Subject to the terms and conditions to be mutually agreed in a share purchase agreement, the
     Purchaser will acquire 266,997,937 equity shares held by Life Healthcare International
     Proprietary Limited, which represents 49.7% of the share capital of Max Healthcare, at Rupees
     80 per share for approximately R4.3 billion before costs and the impact of exchange rate
     fluctuations (the R4.3 billion is an indicative amount based on the rate of exchange as at 19
     September 2018, R1 = Rupees4.93). The final amount will be determined based on the rate of
     exchange when the transaction is finalised. The transaction is currently expected to be finalised
     and become effective before the end of December 2018.

     The business of Max Healthcare

     Max Healthcare is a leading hospital group in India. The business operates state of the art
     hospitals in Delhi-NCR, Punjab and Uttarakhand. Life Healthcare acquired an initial stake of 26%
     in Max Healthcare in 2012 and subsequently increased its stake to 46.25% in 2014. Following
     the acquisition of half of the International Finance Corporation’s interest in 2017, Life Healthcare
     increased its stake in Max Healthcare to 49.7%.

     The consideration

     The total consideration for Life Healthcare’s stake in Max Healthcare will be settled in cash.
     The Company will initially utilise the net proceeds (less estimated costs and taxes) from the
     disposal to settle debt as well as to invest in growth opportunities in the Company’s core
     markets.


     Financial effects of the Transaction

     Max Healthcare is equity accounted for in the published unaudited interim Group results. The
     investment’s book value as at 31 March 2018 amounted to R2.893 billion (30 September 2017:
     R2.960 billion). The net loss after tax for the period ended 31 March 2018 was R67 million (30
     September 2017: R27 million).


3.   CONDITIONS

     The implementation of the Transaction is subject to the fulfillment of the following:

       -   the negotiation and entry into a mutually agreed share purchase agreement to be
           approved by the Boards of the Company and the Purchaser;
       -   the satisfaction of the conditions to be set out in the share purchase agreement including
           necessary regulatory and other approvals required in India being obtained;
       -   the waiver by Max India of its pre-emptive rights under the existing shareholders’
           agreement; and
       -   finalisation of Warranty & Indemnity Insurance on terms acceptable to the Purchaser.


4.   WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

     Given that the material terms of the Transaction are contained in this announcement; caution
     is no longer required to be exercised by shareholders when dealing in their Life Healthcare
     shares.


Illovo
19 September 2018

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

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