ABA
16/09/2013 09:44
GENERAL
REL: 0944 HRS Abano Healthcare Group Limited
GENERAL: ABA: Unsolicited Indicative Proposal Update
Abano Healthcare Group Limited (NZX:ABA) advises that on Friday afternoon (13
September 2013), Australian owned private equity firm Archer Capital, with
the support of Abano director Peter Hutson, approached Abano again to
reactivate its previous unsolicited indicative proposal.
Although the proposal has not materially changed, the Abano Board (excluding
Mr Hutson) has, over the weekend, again carefully considered Archer's
proposal, which now involves:
- A downwards adjustment of the indicative price range to $6.97 to $7.14 per
share, to take account of the recent 13.7 cent dividend and capital raisings
(placement and Share Purchase Plan), with the pricing subject to due
diligence. Archer prefers a scheme of arrangement structure, given its lower
voting threshold and other perceived advantages for Archer.
- Due diligence information requirements, principally on Abano's dental
business, which may or may not result in the indicative price changing.
- Audiology business to be divested post-acquisition, for a nominal sum, to
interests associated with Peter Hutson.
- Mr Hutson's interests are to continue, and potentially increase, their
investment in the company including its dental and other businesses. A
continued (re) investment opportunity is understood to have been offered to
an associate of Mr Hutson, Mr James Reeves, whose interests own approximately
5% of Abano. Archer has advised that no such option has been or is proposed
to be offered to any other shareholder.
The non-conflicted members of the Board remain of the view that progressing a
possible sale of the company on these terms is not in the interests of the
company or all its shareholders.
- Archer's indicated price range falls well below the level the Board
considers reflects fair value for a 100% control transaction, particularly
having regard to prices recently paid for consolidated dental businesses in
Australia and the various growth stages of each of Abano's existing
businesses.
- Archer has said it has a long-standing and well researched interest in the
dental sector and has a stated intention to invest into the dental sector.
Archer is a well-resourced potential competitor and the information it has
requested is confidential and competitively sensitive.
- Archer's intended strategy, as advised, is to inject capital, in a private
setting, and in conjunction with the Hutson interests, into an apparently
more aggressive dental aggregation strategy. The Board notes that any
limitation on the pace of the current dental practice aggregation does not
flow from any lack of capital but from the realities of the time and
management effort required to implement a successful and long term,
sustainable integration strategy.
- The independent directors of the Board are confident in the company, its
management, strategic plan and its own assessment of long term value
creation. The Board does not believe Archer's involvement would yield any
benefit other than a potential short term liquidity option for shareholders.
It notes Archer is not restricted from pursuing any initiatives in accordance
with the takeover mechanisms provided under New Zealand law should it wish to
do so.
The non-conflicted members of the Board have therefore again rejected the
unsolicited approach from Archer Capital and Abano director Peter Hutson. As
a consequence of Mr Hutson's conflicts of interest, the non-conflicted
directors have excluded him from their deliberations. Abano is unaware as to
whether Archer proposes to continue with its attempts to engage with the
company or to withdraw, and accordingly is not in a position to assess what,
if any, prospects there are of an offer being forthcoming.
The Board notes that the current Share Purchase Plan (SPP), which opened on
the 13th of September 2013, is the second stage of the equity capital raising
programme announced to the market on 30 July 2013. After several months of
planning, this capital raising programme was in the final stages of being
implemented when the first approach was received from Archer and Peter
Hutson.
Shareholders should have received their mailed Share Purchase Plan documents
and are reminded that application forms and payment must be received by the
share registrar, Computershare Investor Services Limited, by 5.00pm on 1
October 2013 (unless the closing date is extended in accordance with the
Listing Rules).
Trevor Janes
Chairman
ENDS
End CA:00241133 For:ABA Type:GENERAL Time:2013-09-16 09:44:42
