Swiss refinancing, impact of Swiss interest rates, and UAE growth and refinancing Mediclinic International limited (Incorporated in the Republic of South Africa) Registration number 1983/010725/06 ISIN: ZAE000074142 JSE share code: MDC NSX share code: MCI (“Mediclinic” or “the Group”) SWISS REFINANCING, IMPACT OF SWISS INTEREST RATES, AND UAE GROWTH AND REFINANCING 1. Swiss refinancing package The Group is taking advantage of strong capital markets in Switzerland to refinance its existing debt facilities with a new CHF 1.885 bn package. The refinancing simplifies the existing structure, reduces financing costs going forward and diversifies the funding base and maturity dates. In 2012 the Group’s Swiss debt was refinanced with a package comprising c. CHF 2.1 bn property backed facilities raised in Switzerland and Luxembourg without recourse to the Group’s South African operations, made up as follows: - CHF 1.5 bn first lien facility with a total amortising repayment profile of CHF 450 m until December 2017 and priced at Swiss Libor plus a margin of 2.0%; - a revolving credit facility of CHF 50 m with a bullet maturity in December 2017 priced at Swiss Libor plus a margin of 2.0%; - CHF 0.3 bn second lien facility with a bullet maturity in June 2018, priced at Swiss Libor plus a margin of 3.5%; - CHF 0.25 bn third lien facility with a bullet maturity in June 2018, priced at Swiss Libor plus a margin of 2.0%; - amended interest rate swaps on CHF 1.8 bn notional matching the profile of the first and second lien debt at an initial blended rate of 0.14%; - the total blended cost of this package was expected to be c. 2.5% excluding upfront expenses of approximately CHF 60 m which are amortised over the period of the funding; and - the current total blended cost of this package is c. 3.02% per annum as a result of negative Swiss Libor which is expanded on in paragraph 2. In 2014, the Group embarked on an elective early refinancing process, which has now been concluded through the following steps: - the third lien was repaid in December 2014 at a discount to face value of CHF 17.9 m. This was funded by an increase in the first lien facility of CHF 76 m and the utilisation of Group cash resources and facilities; - a bond program was launched in January 2015 and concluded during February 2015 - CHF 235 m was raised in a dual tranche bond issue comprising CHF 145 m of a six year unsecured bond at a coupon of 1.625% and CHF 90 m of a 10 year unsecured bond at a coupon of 2.0%; - a further increase of the first lien facility back to CHF 1.5 bn, maturing on 31 July 2020 with an annual amortisation of CHF 50 m and priced at Swiss Libor plus a margin of 1.5%; - a repayment of CHF 200 m on the second lien facility and thus a new second lien facility of CHF 100 m with a bullet maturity on 31 July 2020 and priced at Swiss Libor plus 2.85%; - a revolving credit facility of CHF 50 m with a bullet maturity on 31 July 2020 and priced at Swiss Libor plus a margin of 1.5%; - a repayment of the external funding taken over on the acquisition of Clinique La Colline of CHF 15.6 m; - the existing swaps on a notional amount of CHF 1.62 bn are being kept in place. These swaps expire in December 2017 and June 2018 in line with the maturities of the 2012 first and second lien facilities; - the total upfront costs of the refinancing are estimated at c. CHF 10.5 m which will be amortised over the period of the funding; - the revised structure results in an annual reduction in interest charges of c. CHF 12.5 m per annum; - the estimated total blended cost of the new package is c. 2.39% per annum excluding upfront expenses at current Libor levels and - the estimated total blended cost of the new package at a zero Libor rate is c. 1.73 % per annum excluding upfront costs. 2. Impacts of the current interest rate situation in Switzerland During the refinancing in October 2012, swaps were put in place to hedge the exposure on the first and second lien facilities. With the removal of the Swiss Franc/Euro peg and the introduction of negative interest rates in Switzerland, the interest rate hedges become ineffective once Libor is below zero as bank funding at Libor plus relevant margins is always subject to a zero rate Libor floor. The impact of this is a non-cash flow interest charge through the income statement on the ineffective interest rate swap position and is expected to amount to approximately CHF 25 m as at 31 March 2015 before tax and CHF 20 m after tax. The total balance sheet derivative liability as at 31 March 2015 is estimated at between CHF 30 m and CHF 40 m with the prior year number being an asset of CHF 3 m. At the current Libor levels of -0.8% an additional cash interest cost of approximately 0.9% per annum is currently being incurred. The position will vary should rates increase or decrease. 3. New Dubai project An agreement has been reached for the acquisition of land in the fast growing southern side of Dubai and planning is underway for the construction of a 150 bed hospital which will significantly increase the Group’s bed capacity in Dubai. 4. Refinancing of the United Arab Emirates (“UAE”)business Term sheets have been concluded with the existing lending bank to refinance the existing debt as well as provide an additional facility to finance the proposed expansion. A revised total USD 139 m 5 year amortising facility will be put in place. Pricing on this facility has reduced from the current 285 bps to 200 bps. 5. Normalised earnings measure normalised non-IFRS financial measures The Group uses normalised revenue, normalised EBITDA, normalised headline earnings and normalised basic headline earnings per share as non-IFRS measures in evaluating performance and as a method to provide shareholders with clear and consistent reporting. These non-IFRS measures are defined as reportable EBITDA, headline earnings and basic headline earnings per share in terms of accounting standards, excluding one-off items, as detailed above. The Group will exclude the income statement effects of the discount of the repayment of the third lien (CHF 17.9 m before tax) and the interest charge on the ineffective swap position (estimated CHF 25 m before tax) in the calculation of the normalised position. Stellenbosch 30 March 2015 Mediclinic Offices, Strand Road, Stellenbosch 7600, South Africa PO Box 456, Stellenbosch 7599, South Africa Tel +27 (0)21 809 6500 Fax +27 (0)21 886 4037 Ethics Line: 0800 005 316 Website: www.mediclinic.com JSE sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited) NSX sponsor: Simonis Storm Securities (Pty) Ltd Date: 30/03/2015 12:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 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