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Acquisition of Shares in OracleMed Investments
Conduit Capital Limited
Incorporated in the Republic of South Africa
(Registration number 1998/017351/06)
Share code: CND ISIN: ZAE000073128
(“Conduit Capital” or “the Company” or “the Group”)
ACQUISITION OF SHARES IN ORACLEMED INVESTMENTS
1. INTRODUCTION
The board of directors of Conduit Capital (“the Board”) is pleased to inform shareholders that Conduit
Capital and its wholly-owned subsidiary, Constantia Risk and Insurance Holdings Proprietary Limited
(“Constantia”), have, on 27 June 2021 (“Signature Date”), entered into a subscription agreement
(“Subscription Agreement”) with OracleMed Health Group Holdings Proprietary Limited (“OracleMed
Holdings”) and OracleMed Health Investments Proprietary Limited (“OracleMed Investments”) in terms
of which Constantia (or its nominee) will subscribe for:
- 30% of the total issued ordinary no par value shares in OracleMed Investments upon implementation
of the Subscription Agreement (“Subscription Shares A”) for an amount of R42 000 000
(“Subscription Consideration A”); and
- up to 45% of the total issued no par value shares in OracleMed Investments as detailed in paragraph
2.4.2.1 below (“Subscription Shares B”) for an amount to be determined in accordance with the
formula detailed in the Subscription Agreement (“Formula”), which Formula is based on the
achievement of certain earnings thresholds by OracleMed Investments, and which will be capped at a
maximum of R81 750 000 (“Subscription Consideration B”),
subject to the fulfilment or waiver, as the case may be, of the conditions detailed in paragraph 2.3 below
(“the Acquisition”).
The Subscription A Shares and the Subscription B Shares are collectively referred to hereinafter as the
“Subscription Shares”.
The Subscription Consideration A and the Subscription Consideration B are collectively referred to
hereinafter as the “Subscription Consideration”.
After the implementation of the Acquisition, Constantia will own up to 75% of the shares in OracleMed
Investments, making it a subsidiary of Conduit Capital. In accordance with paragraph 10.21 of Schedule
10 of the Listings Requirements of JSE Limited (“Listings Requirements”), Conduit Capital will ensure
that no provisions contained in the memorandum of incorporation of OracleMed Investments will frustrate
the Company in any way from its obligations in terms of the Listings Requirements, nor will it relieve the
Company from compliance with the Listings Requirements.
2. THE ACQUISITION
2.1 Nature of the businesses of Constantia and OracleMed Investments
2.1.1 Constantia
Constantia is the holding company of the Conduit Capital Group’s three registered
insurers, comprising Constantia Insurance Company Limited, Constantia Life Limited and
Constantia Life and Health Assurance Company Limited, as well as a number of
insurance-related subsidiaries.
Constantia offers insurance and risk management solutions, covering areas such as
medical malpractice, primary health insurance and medical gap cover products, funeral
and life insurance, guarantee and indemnity solutions, medical evacuation insurance,
property and casualty (including motor), heavy commercial vehicle, small business and
other niche lines. Constantia’s products are distributed through underwriting management
agencies, administrator managed (binder based) broker distribution and direct broker
relationships.
2.1.2 OracleMed Investments
As detailed in paragraph 2.3.1 below, OracleMed Investments will acquire the business of
OracleMed Health Proprietary Limited (“OracleMed Health”). Established in 2001,
OracleMed Health is a global Medical Insurance Underwriting Manager and Administrator
providing a unique range of International Medical Insurance products in Africa,
underwritten by Constantia. OracleMed Health has a worldwide network of 3,200 hospitals
and established partnerships with 7,000 health providers across Africa.
The Business, as set out in paragraph 2.3.1 below, has built a team of professionals drawn
from a broad range of disciplines, including medical practitioners and healthcare
specialists, who are sensitive to the cultural, political and economic needs across eighteen
Africa countries.
2.2 Rationale for the Acquisition
Constantia has a long-standing relationship with OracleMed Health as its Underwriting Manager
and Administrator for bespoke health products in Africa. The Acquisition allows Constantia to fully
align interests with a key partner and ensure a smooth succession of the OracleMed group
business. A number of synergies will be unlocked across Constantia’s diverse product base while
OracleMed Health’s experience in and networks across Africa is intended to provide Constantia
with access to new markets and USD based earnings.
2.3 Conditions precedent
The Acquisition is subject to the fulfilment or waiver, as the case may be, of the following conditions
by no later than 31 August 2021, or such later date as the parties to the Subscription Agreement
(“Parties”) may agree in writing:
2.3.1 the conclusion of a Sale of Business Agreement, being an agreement to be entered into
between OracleMed Health and OracleMed Investments pursuant to which OracleMed
Investments will acquire from OracleMed Health its specialised outsourced administration
and underwriting management services business and associated revenue opportunities
(“Business”);
2.3.2 each of the boards of directors of Conduit Capital and Constantia passing written
resolutions authorising the transactions contemplated in the Subscription Agreement;
2.3.3 the transactions contemplated in the Subscription Agreement, as read with the Sale of
Business Agreement, having, to the extent required, been approved by the Competition
Authorities; and
2.3.4 the Parties obtaining all regulatory approvals which are necessary for the implementation
of the Acquisition.
2.4 Subscription Shares
2.4.1 Subscription Shares A
2.4.1.1 The Subscription Shares A will be allotted and issued to Contantia with effect
from 1 September 2021 (“Effective Date”), following which the entire issued
share capital of OracleMed Investments will be held by OracleMed Holdings
(70%) and Constantia (30%).
2.4.1.2 It is envisaged that the Subscription Consideration A shall be paid in cash by
Constantia to OracleMed Investments, from a combination of existing cash
resources and new external debt funding, within 48 hours of the Fulfilment Date,
being the date on which the last condition precedent is fulfilled or waived, as the
case may be.
2.4.2 Subscription Shares B
2.4.2.1 Provided that Constantia is a shareholder in OracleMed Investments on
1 September 2022, the Subscription Shares B will be allotted and issued to
Contantia with effect from 1 September 2022, following which the entire issued
share capital of OracleMed Investments will, subject to the Formula, be held by
Constantia (up to 75%) and the balance by OracleMed Holdings.
2.4.2.2 It is envisaged that the Subscription Consideration B shall be paid in cash by
Constantia to OracleMed Investments, from a combination of existing cash
resources and new external debt funding, on or about 15 October 2022.
2.4.3 OracleMed Investments will apply the Subscription Consideration towards discharging its
indebtedness to OracleMed Holdings arising out of the purchase of the Business pursuant
to the Sale of Business Agreement.
2.5 Warranties
The Subscription Agreement contains warranties that are normal for a transaction of this nature.
3. FINANCIAL INFORMATION
The value of the audited net assets of OracleMed Health as at 31 August 2020 was R96 560 305. The
audited profit attributable to OracleMed Health for the year ended 31 August 2020 was R25 904 634. The
net assets of the Business being acquired as at 31 August 2020 was R6 216 311 and the profit attributed
to the net assets of the Business for the year ended 31 August 2020 was R23 312 759.
The audited annual financial statements for OracleMed Health for the year ended 31 August 2020 were
prepared in accordance with International Financial Reporting Standards for Small and Medium-sized
Entities and the Companies Act.
4. CLASSIFICATION OF THE ACQUISITION
The Acquisition is classified as a Category 2 transaction in terms of the Listings Requirements.
Shareholders are advised that the Acquisition is not related to the renewal of cautionary announcement
released on SENS on 28 May 2021. Further announcements in relation thereto will be published on SENS
in due course.
Johannesburg
29 June 2021
Sponsor
Merchantec Capital
Date: 29-06-2021 01:51:00
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