To view the PDF file, sign up for a MySharenet subscription.

LIFE HEALTHCARE GROUP HOLDINGS LIMITED - Rights offer declaration announcement

Release Date: 16/03/2017 17:17
Code(s): LHC     PDF:  
Wrap Text
Rights offer declaration 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”)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES,
AUSTRALIA, CANADA AND JAPAN. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM AN OFFER OF
SECURITIES IN THE UNITED STATES OR ANY OTHER JURISDICTION.

RIGHTS OFFER DECLARATION ANNOUNCEMENT

1. Introduction

Life Healthcare shareholders are referred to the announcements released on the Stock Exchange News Service (“SENS”)
dated 16 November 2016, 20 December 2016 and 20 January 2017, wherein Life Healthcare announced the acquisition of
Alliance Medical Group Limited (“Alliance Medical”) and the proposed fully underwritten, renounceable rights offer (“Rights
Offer”) to qualifying Life Healthcare shareholders to raise approximately R9.0 billion to be used to refinance a portion of the
acquisition bridge facility.

2. Rationale for the Rights Offer

The acquisition of Alliance Medical (“Acquisition”) was completed on 21 November 2016 and was funded through drawings
from a bridge facility. Following the Acquisition and the drawdowns under the bridge facility, Life Healthcare’s net debt position
has temporarily increased to approximately 4.1 times the pro forma normalised EBITDA of Life Healthcare and Alliance
Medical for the year ended 30 September 2016.

The board of directors of Life Healthcare (“Board”) has given due consideration to the continued implementation of Life
Healthcare’s strategy and to its post-Acquisition capital structure and has resolved to raise capital by way of the Rights Offer.
The net proceeds of the Rights Offer will be used to repay a portion of the bridge facility in order to reduce the Company’s net
debt position to a level which the Board considers to be appropriate for the Company to maintain sufficient flexibility to pursue
its planned capital investment programme and to continue paying dividends.

On 25 January 2017, at Life Healthcare’s annual general meeting, Life Healthcare’s shareholders approved resolutions
authorising Life Healthcare, among other things, to raise up to R9.0 billion equity capital by way of the Rights Offer to qualifying
Life Healthcare shareholders.

3. Terms of the Rights Offer

The Rights Offer will raise gross proceeds of approximately R9.0 billion. The final terms of the Rights Offer, including the
Rights Offer price and ratio of entitlement, will be announced on the finalisation date, being on or before Thursday, 23 March
2017.

Absa Corporate and Investment Bank, a division of Absa Bank Limited, and Rand Merchant Bank, a division of FirstRand
Bank Limited, are acting as the joint bookrunners for the Rights Offer (“Joint Bookrunners”).

4. Excess applications

Life Healthcare shareholders will be entitled to apply for additional Rights Offer shares over and above their entitlement.

5. Irrevocable undertakings and underwriting

Brimstone Investment Corporation (Brimstone”) and Allan Gray Proprietary Limited, acting for and on behalf of its clients
(“Allan Gray”), collectively control, directly or indirectly, 21.2% of Life Healthcare ordinary shares. Brimstone and Allan Gray
have entered into irrevocable undertakings in favour of the Company to subscribe for some or all of the Rights Offer shares
to which they are entitled pursuant to their rights under the Rights Offer.

It is intended that the balance of the Rights Offer shares will be underwritten by the Joint Bookrunners, subject to customary
terms and conditions.
All of the directors of Life Healthcare having an interest in Life Healthcare ordinary shares have, as at the date hereof,
confirmed their intention to exercise their rights in terms of the Rights Offer.


6. Salient dates and times of the Rights Offer

Subject to the fulfilment of the conditions precedent set out in paragraph 7 below, the proposed salient dates and times for the
Rights Offer are set out below:


                                                                                                                            2017

Finalisation date on or about                                                                                 Thursday, 23 March

Last day of dealings to acquire Life Healthcare ordinary shares (cum rights) in order to qualify to
participate in the Rights Offer on                                                                             Tuesday, 28 March

Shares commence trading ex rights on the exchange operated by the JSE Limited (“JSE”) at
09h00 on                                                                                                     Wednesday, 29 March
                                                                                                             
Listing of and trading in the letters of allocation commences under JSE code LHCN and ISIN
ZAE000239976 at 09h00 on                                                                                     Wednesday, 29 March

Rights Offer circular and form of instruction (where applicable) posted to qualifying, certificated
Life Healthcare shareholders on                                                                               Thursday, 30 March
                                                                                                              
Record date for purposes of determining the Life Healthcare shareholders entitled to participate
in the Rights Offer, at the close of business on                                                                Friday, 31 March
                                                                                                                
Rights Offer opens at 09h00 on                                                                                   Monday, 3 April

In respect of qualifying certificated Life Healthcare shareholders, letters of allocation credited to
an electronic account held with the transfer secretaries at 09h00 on                                             Monday, 3 April

In respect of qualifying dematerialised Life Healthcare shareholders, CSDP or broker accounts
credited with letters of allocation at 09h00 on                                                                  Monday, 3 April

Rights Offer circular, where applicable, posted to qualifying dematerialised Life Healthcare
shareholders on                                                                                                 Tuesday, 4 April
                                                                                                               
Last day to trade in letters of allocation in order to participate in the Rights Offer on                       Monday, 10 April

Listing of Rights Offer shares on the exchange operated by the JSE at 09h00 on                                 Tuesday, 11 April

In respect of qualifying certificated Life Healthcare shareholders (or their renouncees) wishing to
exercise all or some of their rights, payment to be made and forms of instruction to be lodged                Thursday, 13 April
with the transfer secretaries by 12h00 on

Rights Offer closes at 12h00 on                                                                                Thursday,13 April

Record date for letters of allocation on                                                                      Thursday, 13 April

Rights Offer shares issued on                                                                                  Tuesday, 18 April

In respect of qualifying dematerialised Life Healthcare shareholders (or their renouncees), CSDP
or broker accounts debited with the aggregate Rights Offer price and updated with Rights Offer                 Tuesday, 18 April
shares at 09h00 on

In respect of qualifying certificated Life Healthcare shareholders (or their renouncees), share                Tuesday, 18 April
certificates in respect of Rights Offer shares posted by registered post on or about

Results of the Rights Offer released on SENS on                                                                Tuesday, 18 April

Results of the Rights Offer published in the press on                                                        Wednesday, 19 April

In respect of successful excess applications (if applicable), Rights Offer shares issued to
qualifying dematerialised Life Healthcare shareholders and/or share certificates posted to                    Thursday, 20 April
qualifying certificated Life Healthcare shareholders on or about

In respect of unsuccessful excess applications (if applicable), refund cheques posted to
qualifying certificated Life Healthcare shareholders on or about                                              Thursday, 20 April


Notes:
1. All times referred to in the announcement are local times in South Africa.
2. Qualifying dematerialised Life Healthcare shareholders (or their renouncees) will have their accounts at their CSDP automatically
   credited with their rights.
3. CSDPs effect payment in respect of dematerialised Life Healthcare shareholders (or their renouncees) on a delivery versus
   payment basis.
4. Holders of dematerialised Life Healthcare ordinary shares are required to notify their CSDP or broker of the action they wish to take
   in respect of the Rights Offer in the manner and by the time stipulated in their custody agreements.
5. Qualifying certificated Life Healthcare shareholders (or their renouncees) will have their rights credited to an account with the
   transfer secretaries.
6. Life Healthcare ordinary share certificates may not be dematerialised or rematerialised between 29 March 2017 and 31 March
   2017, both days inclusive.
7. Share certificates will be posted at the risk of the qualifying certificated Life Healthcare shareholders (or their renouncees)
8. Any material changes to the dates and times above will be released on SENS.

7. Conditions precedent

The implementation of the Rights Offer is subject to the fulfilment of the following conditions:
- approval being obtained from the JSE for the Rights Offer circular; and
- approval being obtained from the JSE for the listing of the letters of allocation and the listing of the Rights Offer shares.

8. Requirement to restructure Alliance Medical management incentive arrangements

As part of new management incentive arrangements entered into with certain members of Alliance Medical’s management
team in connection with the Acquisition (the “Management Incentive Arrangements”), Life Healthcare initially granted put
options (the “Put Options”) to certain members of Alliance Medical’s management team in order to provide them with a liquidity
mechanism to realise value from the Management Incentive Arrangements at certain future dates.

At the time the transaction agreements were entered into, Life believed that the Put Options represented management
incentive arrangements, entered into in the ordinary course of business, rather than part of the Acquisition consideration and
Life was not advised to the contrary. The Put Options were accordingly not taken into account when determining the
categorisation of the Acquisition. Following completion of the Acquisition and in the course of structuring the Rights Offer, it
came to the knowledge of the Company and the Sponsor that the granting of the Put Options should have been taken into
account when determining the categorisation of the Acquisition under Section 9 of the Listings Requirements, which would
have resulted in the Acquisition having been categorised as a Category 1 transaction. Following proactive engagements with
the JSE on this matter, the JSE concluded that the granting of the Put Options should have resulted in the Acquisition being
treated as a Category 1 transaction, and that consequently Life had not complied with Section 9 of the Listings Requirements.
As a result of its finding, the JSE issued a private censure of Life on 24 February 2017, subject to the remedial action referred
to below.

In order to remedy the breach of the Listings Requirements, Life and Alliance Medical’s management team have agreed to
restructure the Incentive Arrangements by, among other things, removing the Put Options, while retaining call options over
the shares. Alliance Medical’s management team will instead be incentivised through the payment of cash incentive bonus
payments, payable by Alliance Medical. Any payment to be made pursuant to the exercise of a call option or cash incentive
bonus payment under the Management Incentive Arrangements will be required to be categorised under Section 9 of the
Listings Requirements at the time that such payment is to be made.

Accordingly, this matter has been concluded and resolved with the JSE on the basis that as a result of the aforementioned
restructuring the Put Options have been removed, and, if the Incentive Arrangements had been structured in this manner
initially, would not have impacted, the categorisation of the Acquisition under Section 9 of the JSE Listings Requirements. The
JSE will take no further action against the Company.

9. Further notices

It is anticipated that the finalisation announcement for the Rights Offer, including the final terms of the Rights Offer, will be
released on SENS on or about Thursday, 23 March 2017 and published in the South African press on or about Friday, 24
March 2017.

The Rights Offer circular and a form of instruction in respect of a letter of allocation will be posted to qualifying certificated Life
Healthcare shareholders on Thursday, 30 March 2017. The Rights Offer circular will be posted to qualifying dematerialised
Life Healthcare shareholders registered on the record date for the Rights Offer on or about Tuesday, 4 April 2017. The Rights
Offer circular will be made available on www.lifehealthcare.co.za on or about Tuesday, 28 March 2017.


Illovo
16 March 2017

Joint Bookrunner, and sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)

Joint Bookrunner
Absa Corporate and Investment Bank, a division of Absa Bank Limited

International and South African legal counsel to Life Healthcare
Allen & Overy LLP


Important Notice

The information contained herein is not for release, publication or distribution, directly or indirectly, in or into the United States,
its territories or possessions, Canada, Australia or Japan or any other jurisdiction in which the distribution or release would be
unlawful. These materials are not and do not contain an offer of securities for sale or a solicitation of an offer to purchase or
subscribe for securities in any jurisdiction, including the United States, Australia, Canada or Japan or any other state or
jurisdiction in which such release, publication or distribution would be unlawful. The securities to which these materials relate
(the “Securities”) have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “Securities
Act”), and may not be offered or sold in the United States unless registered under the Securities Act or pursuant to an
exemption from, or in a transaction not subject to, registration under the Securities Act. There will be no public offer of the
Securities in the United States. Subject to certain exceptions, the Securities may not be offered or sold in Australia, Canada
or Japan or to, or for the account or benefit of, any national, resident or citizen of such countries.

These materials are only being distributed to and are only directed at: (i) persons who are outside the United Kingdom; or (ii)
to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005 (the “Order”); or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling
within Article 49(2) of the Order; or (iv) persons to whom an invitation or inducement to engage in investment activity (within
the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities
may otherwise lawfully be communicated; or (v) persons to whom it may otherwise lawfully be communicated (all such persons
together being referred to as “relevant persons”). The Securities are only available to, and any invitation, offer or agreement
to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is
not a relevant person should not act or rely on this announcement or any of its contents.

In any member state of the European Economic Area (other than the United Kingdom) that has implemented Directive
2003/71/EC (and amendments thereto, including Directive 2010/73/EU to the extent implemented in the relevant Member
State, together with any applicable implementing measures in any Member State, the “Prospectus Directive”) this
announcement is only addressed to and is only directed at qualified investors in that Member State within the meaning of the
Prospectus Directive.
These materials do not constitute or form a part of any offer or solicitation or advertisement to purchase and/or subscribe for
Securities in South Africa, including an offer to the public for the sale of, or subscription for, or the solicitation or advertisement
of an offer to buy and/or subscribe for, shares as defined in the South African Companies Act, No. 71 of 2008 (as amended)
or otherwise (the “Act”) and will not be distributed to any person in South Africa in any manner that could be construed as an
offer to the public in terms of the Act. These materials do not constitute a prospectus registered and/or issued in terms of the
Act. Nothing in this announcement should be viewed, or construed, as “advice”, as that term is used in the South African
Financial Markets Act, No. 19 of 2012, as amended, and/or Financial Advisory and Intermediary Services Act, No. 37 of 2002,
as amended.

The contents of this announcement have not been verified by the Joint Bookrunners in connection with the Rights Offer or any
of their respective affiliates (together, the "Banks"). The Banks are each acting exclusively for Life Healthcare and for no-one
else in connection with any transaction mentioned in these materials and will not regard any other person (whether or not a
recipient of this announcement) as a client in relation to any such transaction and will not be responsible to any other person
for providing the protections afforded to their respective clients, or for advising any such person on the contents of these
materials or in connection with any transaction referred to in this announcement.

No reliance may be placed for any purposes whatsoever on the information contained in this announcement or on its accuracy
or completeness. No representation or warranty, expressed or implied, is given by or on behalf of Life Healthcare, Alliance
Medical, the Banks or their respective affiliates, directors, officers or employees, advisors or any other person as to the
accuracy or completeness of the information or opinions contained in this announcement, and no liability whatsoever is
accepted for any such information or opinions or any use which may be made of them.

Persons receiving this announcement should make all trading and investment decisions in reliance on their own judgement
and not in reliance on the Banks or this document. None of the Banks is providing any such persons with advice on the
suitability of the matters set out in this announcement or otherwise providing them with any investment advice or personal
recommendations. Any presentations, research or other information communicated or otherwise made available in this
document is incidental to the provision of services by the Banks to Life Healthcare and is not based on individual
circumstances.

All investment is subject to risk. The value of the securities offered may go down as well as up. Past performance is no
guarantee of future returns. Potential investors are advised to seek expert financial advice before making any investment
decision.

Forward-Looking Statements

This announcement includes certain forward-looking statements, beliefs or opinions, including statements with respect to Life
Healthcare or Alliance Medical’s business, financial condition, results of operations and prospects. Forward-looking
statements are typically identified by the use of forward looking terminology such as “believes”, “expects”, “may”, “will”, “could”,
“should”, “intends”, “estimates”, “plans”, “assumes”, “anticipates”, “annualized”, “goal”, “target” or “aim” or the negative thereof
or other variations thereof or comparable terminology, or by discussions of strategy that involve risk and uncertainties. These
statements reflect the directors' beliefs and expectations and involve risk and uncertainty because they relate to events and
depend on circumstances that will occur in the future. No representation is made that any of these statements or forecasts will
come to pass or that any forecast results will be achieved. There are a number of risks, uncertainties and factors that could
cause actual results and developments to differ materially from those expressed or implied by these statements and forecasts.
Past performance cannot be relied on as a guide to future performance. Forward-looking statements speak only as at the date
of this announcement, and Life Healthcare expressly disclaims any obligations or undertaking to release any update of, or
revisions to, any forward-looking statements in this announcement. No statement in this announcement is intended to be a
profit forecast. As a result, you are cautioned not to place any undue reliance on such forward-looking statements. Please
refer to the Life Healthcare’s Integrated Report for the financial year ended 30 September 2016 for a description of certain
important factors, risks and uncertainties that may affect Life Healthcare’s businesses.

Date: 16/03/2017 05:17:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story