NETCARE - ACQUISITION IN AMPATH HOLDINGS

NETWORK HEALTHCARE HOLDINGS LIMITED
(REGISTRATION NUMBER 96/08242/06)
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
("NETCARE")

ACQUISITION OF AN INTEREST IN THE AMPATH HOLDINGS TRUST ("HOLDINGS")
1. INTRODUCTION

RAND MERCHANT BANK LIMITED ("RMB") IS AUTHORISED TO ANNOUNCE THAT NETCARE
HEALTH SYSTEMS (PROPRIETARY) LIMITED ("HEALTH SYSTEMS"), A WHOLLY OWNED
SUBSIDIARY OF NETCARE WILL, SUBJECT TO CERTAIN CONDITIONS PRECEDENT BEING
FULFILLED, ACQUIRE 50% OF THE UNITS IN AND 50% OF THE VENDORS CLAIMS AGAINST
HOLDINGS, WITH EFFECT FROM 1 SEPTEMBER 1997.
2. NATURE OF BUSINESS

2.1 HOLDINGS IS THE OWNER OF 74% OF THE UNITS IN THE AMPATH TRUST ("THE
TRUST"), THE REMAINING 26% BEING OWNED BY A WHOLLY OWNED SUBSIDIARY OF SA
DRUGGISTS LIMITED. THE TRUST CONDUCTS BUSINESS AS A PROVIDER OF SPECIALISED
FACILITIES AND COMPREHENSIVE MANAGEMENT AND ADMINISTRATIVE SERVICES TO THE
HEALTHCARE INDUSTRY.

2.2 THE TRUST OWNS A NETWORK OF 30 HIGH TECHNOLOGY LABORATORIES IN AND AROUND
SOUTH AFRICA, AND OPERATIONS MANAGEMENT CENTRES IN JOHANNESBURG, KEMPTON PARK,
PRETORIA, DURBAN, EAST LONDON AND MAPUTO. IN ADDITION TO PROVIDING SPECIALISED
TECHNICAL FACILITIES AND COMPREHENSIVE MANAGEMENT SERVICES TO THE PATHOLOGY
PROFESSION, THE TRUST HAS A DEVELOPED EXPERTISE, INTER ALIA, IN NUTRITIONAL
HEALTH, THE FORENSIC AND FERTILITY SCIENCES, MOLECULAR BIOLOGY, CYTOGENIC
SERVICES, VETERINARY PATHOLOGY, OCCUPATIONAL HEALTH CONSULTING AND CLINICAL
DRUG TRIAL EVALUATION, ALL OF WHICH SERVICES ARE PROVIDED TO A WIDE RANGE OF
CLIENTS IN SOUTH AFRICA AND ABROAD.
3. RATIONALE FOR THE ACQUISITION

3.1 HEALTH SYSTEMS IS A SPECIALISED HEALTH MANAGEMENT AND ADVISORY SERVICES
COMPANY IN THE NETCARE GROUP THE MAIN BUSINESS OF WHICH IS TO ADVISE, MANAGE
AND ADMINISTER HEALTHCARE OPERATIONS AND HEALTHCARE SYSTEMS IN THE BROAD
HEALTHCARE INDUSTRY.

3.2 THE ACQUISITION BY HEALTH SYSTEMS OF AN EFFECTIVE 37% MINORITY INTEREST IN
THE TRUST ADDS A FURTHER DIMENSION TO THE NETCARE GROUP'S DELIBERATE OBJECTIVE
OF DEVELOPING ITS COMPETENCE AS AN INTEGRATED HEALTHCARE SERVICES ORGANISATION.
FURTHERMORE IT ENABLES HEALTH SYSTEMS TO CONTRIBUTE ITS EXPERTISE ON THE
SPECIALISED SERVICES PROVIDED BY THE TRUST SO AS TO OPTIMALLY PERFORM ITS ROLE
AND FUNCTION IN THE VERITABLE SHIFT TOWARDS MANAGED CARE DELIVERY SYSTEMS.
4. SALIENT TERMS OF THE ACQUISITION

4.1 THE CONSIDERATION FOR THE ACQUISITION OF THE SALE UNITS AND SALE CLAIMS IN
HOLDINGS IS THE SUM OF R108 300 000, WHICH AMOUNT IS PAYABLE ON THE SECOND
BUSINESS DAY AFTER THE FULFILLMENT OF THE LAST OF THE CONDITIONS PRECEDENT, AS
FOLLOWS:
4.1.1 THE SUM OF R59 500 000 IN CASH.

4.1.2 THE BALANCE OF R48 800 000 BY THE ALLOTMENT AND ISSUE TO THE VENDORS OF
61 MILLION NETCARE SHARES AT 80 CENTS PER SHARE, WHICH SHARES WILL RANK PARI
PASSU WITH THE EXISTING ISSUED ORDINARY SHARES OF NETCARE.

4.2 NETCARE HAS RECEIVED THE CUSTOMARY WARRANTIES AND INDEMNITIES NORMALLY
PROVIDED FOR IN TRANSACTIONS OF THIS NATURE.
5. FINANCIAL EFFECTS OF THE TRANSACTION

 THE FINANCIAL EFFECTS OF THE ACQUISITION ON THE EARNINGS PER ORDINARY SHARE OF
NETCARE FOR THE YEAR ENDED 30 SEPTEMBER 1998 AND THE NET ASSET VALUE PER
ORDINARY SHARE OF NETCARE AT THAT DATE, WILL BE FULLY DISCLOSED IN THE ANNUAL
RESULTS OF NETCARE TO BE PUBLISHED ON OR ABOUT 22 DECEMBER 1998.
6. CAUTIONARY ANNOUNCEMENT

HAVING REGARD TO THE IMMINENT PUBLICATION OF THE NETCARE GROUP'S ANNUAL
RESULTS, IT WOULD BE INAPPROPRIATE TO DISCLOSE THE EARNINGS AND NET ASSET VALUE
IMPACT OF THE ACQUISITION OF HOLDINGS AT THIS TIME. SHAREHOLDERS ARE THEREFORE
ADVISED TO EXERCISE CAUTION IN THEIR DEALINGS IN NETCARE SHARES UNTIL THE
PUBLICATION OF NETCARE'S ANNUAL RESULTS.
SANDTON
18 DECEMBER 1998
RAND MERCHANT BANK LIMITED
SPONSORING BROKER
MERRILL LYNCH
SMITH BORKUM HARE
MERRILL LYNCH SOUTH AFRICA (PTY) LTD
REGISTRATION NO. 95/01805/07
MEMBER OF THE JOHANNESBURG STOCK EXCHANGE
ATTORNEYS
H R LEVIN