Advanced Health’s share price rose 87% to 75 cents yesterday, after it announced an agreement for Eenhede Konsultante Eiendoms Beperk, its biggest shareholder, to acquire all the issued shares of Advanced Health at 80 cents per share.
The offer excludes the shares held by associates of Eenhede Konsultante: VC Family Trust, the Carl Grillenberger Family Trust and Pres Medical Witbank Proprietary.
The offer is by way of a scheme of arrangement that will, ultimately, lead to the delisting of Advanced Health.
Advanced Health listed on the JSE in 2014. Its reasons for listing included access to institutional investment funding and the potential to use its shares as acquisition currency.
The company said yesterday that since listing, it had been unable to attract significant institutional interest to justify the limitations of the regulatory processes, and the compliance costs incidental to being listed on the JSE.
“Advanced Health’s ability to raise capital is hampered by the lack of investment interest in small, illiquid counters, as well as the Advanced Health shares trading at a discount to their underlying net asset value which results in any capital raise at market value being highly dilutive to Advanced Health shareholders,” the company's directors said yesterday.
They said that in the medium to long-term, Advanced Health’s capital raising needs would be better served in the unlisted environment.
Following the disposal of PresMed Australia, Advanced Health directors were focusing on turning its South African operations into a profitable business through several strategies.
As part of the focus, the board had reconsidered whether its smaller asset base, and need to reduce overhead costs, warranted Advanced Health’s continued listing on the JSE.
“Given the current lack of investment interest in small, illiquid counters, the Advanced Health board is of the view that the costs associated with a JSE listing outweigh the benefits of a JSE listing.”
The board has proposed a scheme to provide Advanced Health shareholders with the ability to realise their investment in Advanced Health at a price considerably higher than the 5, 10, 20 and 30-day average price of Advanced Health shares.
Eenhede Konsultante holds 57.64% of Advanced Health, and Pres Medical Witbank 10.66%, which, with the two family trusts, means together they control 71.1% of the shares.
In addition, shareholders who control 22.89% of the shares had indicated they would support the scheme of arrangement.
BUSINESS REPORT