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Detailed terms announcement regarding the Disposal of 25.1% of Presmed Australia Pty Limited
ADVANCED HEALTH LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/059246/06)
(“the Company” or “Advanced Health”)
ISIN Code: ZAE000189049 JSE Code: AVL
DETAILED TERMS ANNOUNCEMENT REGARDING THE DISPOSAL OF 25.1% OF PRESMED
AUSTRALIA PTY LIMITED
1 INTRODUCTION AND BACKGROUND TO THE TRANSACTION
Shareholders are referred to the detailed cautionary announcement released on SENS on
Tuesday, 26 November 2019 and are advised that Advanced Health, Investmed Holdings Pty
Limited (“Investmed”) and Presmed Australia Pty Limited (“PMA”) have concluded the Share Sale
and Purchase Agreement on 11 December 2019 (“Signature Date”), for Investmed to acquire
25.1% of PMA’s shares from Advanced Health, for a total transaction consideration of AUD5.775
million (approximately ZAR58.324 million) (the “Transaction”). Advanced Health currently owns
86.51%, of PMA, following the Transaction, Advanced Health will own 61.41% of PMA. The Parties
are in the process of finalising a Shareholders Agreement which will be implemented together
with the Share Sale and Purchase Agreement.
2 BACKGROUND TO PMA
PMA is the major shareholder of four-day hospitals in New South Wales (“NSW”), having
management contracts in place at each one, plus an additional management contract in the only
eye laser clinic in the Central Coast area of NSW.
3 BACKGROUND TO INVESTMED
Investmed is an investment vehicle that was established with the belief in the strategy and future
growth objectives of PMA. It is owned by individuals associated with PMA, including PMA
Management and Directors, as well as 27 key Doctor Shareholders at the day hospitals that PMA
manages. Of the 27 Doctor Shareholders, 14 are directors of PMA-owned day hospitals and
another four have been awarded Associate Professorship at two of Sydney’s leading University
Teaching Hospitals.
PMA management includes its Managing Director, Chief Executive Officer and Chief Financial
Officer, all of whom have been working for PMA and assisting in the growth of its business, having
a combined experience within the Company totalling over 50 years.
In FYE 2019, the 27 Doctor Shareholders in Investmed contributed more than 60% of the total
revenue in the PMA Group of Day Hospitals, equating to AUD19.3 million (approximately
ZAR194.911 million. These doctors also hold shareholding across four of the PMA day hospitals,
with several of them being shareholders since the inception of PMA over 21 years ago. Having
invested in Investmed, the doctors have shown that they are motivated and encouraged by this
opportunity, demonstrating their commitment, loyalty and support in PMA and its Management
team.
4 RATIONALE FOR THE TRANSACTION
The funding received from the transaction will primarily be used by Advanced Health to settle
debt and to fund operations.
5 KEY TERMS OF THE TRANSACTION
5.1 Share Sale and Purchase Agreement (“SPA”)
In terms of the SPA, Investmed will acquire and Advanced Health will sell, 210 542 issued
ordinary PMA shares (constituting 25.1% of the total 838 813 issued ordinary PMA shares),
together with all the rights attached to the PMA shares as at the Effective Date, including
but not limited to, the right to receive all distributions declared, made or paid in respect of
the PMA shares on or after the Effective Date.
The SPA further contains legal warranties and indemnities which are considered normal in
respect of a transaction of this nature.
5.2 Shareholders Agreement (“SHA”)
The SHA stipulates the terms and conditions applicable between the parties upon
implementation of the SPA.
• The parties to the SHA and the Shareholders of PMA post the implementation of the
Transaction is set out below:
SHAREHOLDER NUMBER OF % INTEREST
SHARES
Advanced Health 515 106 61.41
Investmed 210 542 25.10
Marc Resnik (via Kinser Investments Pty Ltd) 44 285 5.28
(director of AVL & PMA)
Johan Oelofse (director of AVL) 12 836 1.53
Feng Neal (director of PMA) 10 000 1.19
Feng Neal (via BFN & Associates Pty Ltd) (director of 10 000 1.19
PMA)
Roger Cronin (director of PMA) 10 000 1.19
Roger Cronin (via Rogcar Investments Pty Ltd) 10 000 1.19
(director of PMA)
Ysbrand Visser (Via Maluti Holding AG) (director of 6 418 0.77
AVL and PMA)
Ivan Kassel (via Davilar Pty Ltd) (director of PMA) 5 348 0.64
Alan Flax (via Talocave Pty Ltd) (director of PMA) 4 278 0.51
Total 838 813 100.00%
The SHA is subject to the SPA having been entered into and becoming unconditional.
The SHA further contains standard provisions required for the governance of PMA, including,
but not limited to, board of directors’ meetings, shareholder meetings, financing,
management of the company and pre-emptive rights.
5.3 Transaction consideration
The total transaction consideration is AUD5.775 million (approximately ZAR58.324 million)
(equating to AUD27.43 (R277.02 per ordinary PMA share). Investmed paid a deposit of
AUD2.5 million (approximately ZAR25.248 million) to Advanced Health on 2 December 2019,
which will be held in an account with a financial institution selected by Advanced Health.
Advanced Health will not utilise the deposit prior to the Settlement Date, which is the date
being 5 business days after all the Suspensive Conditions have been fulfilled, or such earlier
or later date as may be agreed by the parties in writing.
The balance amount of AUD3.275 million (approximately ZAR33.076 million) is payable on
the Settlement Date and will be adjusted to include:
- a reduction to the balance amount calculated as interest payable on the deposit amount,
calculated at the rate of 7% per annum for the period calculated from the date of the
deposit, being 2 December 2019, up to, and including, the day immediately preceding to
the Settlement Date.
- an addition to the balance amount calculated as interest payable on the balance amount,
calculated at the rate of 7% per annum for the period calculated from 1 January 2020 up
to, and including, the day immediately preceding to the Settlement Date.
Investmed will fund the Transaction consideration from cash reserves and operational cash
flows
5.4 Suspensive conditions
As at the date of this announcement, the SPA is subject to the fulfilment of the following
suspensive conditions:
• Investmed successfully performing a comprehensive due diligence (“Due Diligence”) by
31 December 2019, in its unfettered discretion, including, amongst other things, the
following:
o Accounting;
o Legal;
o Financial;
o Tax;
o Human Resourcing;
o Technical and operational;
o Information Technology;
o Insurance; and
o Commercial.
• PMA shareholders and directors, if deemed necessary, passing such special resolution/s
(if any), in form and substance reasonably acceptable to Investmed, as may be necessary
to adopt the SHA and such agreement becoming unconditional in accordance with its
terms;
• Advanced Health delivering to Investmed –
o a copy of the resolution of the board of directors of Advanced Health,
unconditionally approving the Transaction; and
o a written shareholders resolution, approved by the requisite majority of Advanced
Health shareholders at a properly convened general meeting, unconditionally
approving the terms of the Transaction, to the extent required by the JSE Listings
Requirements;
• Advanced Health distributing a circular and notice of general meeting, which circular
is subject to the JSE Listings Requirements and prior approval by the JSE Limited, to
its shareholders, in order to obtain the shareholder approval required above;
• Advanced Health obtaining a fairness opinion regarding the fairness of the
Transaction, to Advanced Health shareholders, from an independent expert
acceptable to the JSE;
• Investmed providing Advanced Health with a copy of a resolution of the board of
directors of Investmed, unconditionally approving the terms of the Transaction;
• No material adverse change in the financial or trading position of PMA as well as no
material adverse changes to the management of PMA, have occurred during the
period between the signature date of the SPA and the date on which such
confirmation is provided;
• Advanced Health providing written confirmation to Investmed that all consents
pertaining to change of control provisions contained in all material agreements
between PMA and counterparties have been obtained from such counterparties to
the extent that the conclusion of the Transaction is approved and that such material
contracts will continue in accordance with its existing terms after the Signature Date;
and
• The remaining shareholders of PMA prior to the Settlement Date, waive any pre-
emptive rights which they may have in Law, or in terms of the Memorandum and
Articles of Association of PMA, to acquire the ordinary PMA shares.
Should the suspensive conditions not be fulfilled or waived, within 90 days from the
Signature Date (the “Long Stop Date”), or such later date as agreed by the parties (which
extended date may in any event not be later than 31 March 2020), then the SPA, will be
regarded as automatically cancelled and of no force or effect.
5.5 Effective date
The effective date is 1 July 2019, notwithstanding the Signature Date.
6 RELATED PARTY INTEREST IN TRANSACTION
Marc Resnik is currently the managing director of PMA, an executive director on the Advanced
Health board of directors and will be a 2.13% shareholder in Investmed.
7 PROFIT AND NET ASSET VALUES ATTRIBUTABLE TO PMA
The net assets of the consolidated PMA group, as per the audited annual financial statements for
the 12 months ended 30 June 2019, were AUD14.806 million (approximately ZAR149.526
million). The profit after tax attributable to the net assets of the consolidated PMA group for the
same period were AUD974 449 (approximately ZAR9.841 million).
The audited annual financial statements for PMA were prepared in accordance with International
Financial Reporting Standards (“IFRS”) as appropriate for for-profit-oriented entities.
8 CATEGORISATION OF THE TRANSACTION
The Transaction is categorised as a category 1 disposal and related party transaction for
Advanced Health in terms of the Listings Requirements of the JSE Limited and is therefore subject
to Advanced Health shareholder approval.
The board of directors will procure and obtain the fairness opinion from an Independent Expert,
as required in terms of the Listings Requirements of the JSE Limited and will distribute the
category 1 disposal circular to shareholders, including the notice to convene the general meeting,
in due course, subject to the relevant regulatory approvals being obtained.
9 WITHDRAWEL OF CAUTIONARY ANNOUNCEMENT
Given that the SPA has been finalised and the key terms of the SHA have been provided, all the
details relating to the Transaction is contained in this announcement, shareholders are advised
that caution is no longer required when dealing in the company’s securities.
Note: a rate of AUD1 : ZAR 10.0990 was applied to all exchange rate conversions in the announcement.
Johannesburg
12 December 2019
Designated Advisor
Grindrod Bank Limited
Date: 12-12-2019 02:00:00
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