Abano Healthcare Announces Conditional Sale Of Eldercare New Zealand Limited
Listed healthcare and medical services provider, Abano Healthcare Group Limited, today announced the signing of a
conditional agreement to sell ElderCare New Zealand Limited to Macquarie Bank Limited.
The sale is for 100 percent of the shares of ElderCare and the related inter-company loan from Abano to ElderCare, for
total consideration of NZ $63.5 million.
Settlement is expected to occur by the end of July 2005, following satisfaction of conditions including approval of the
sale by Abano’s shareholders at a special meeting to be held on 27 June 2005, and the approval of the Overseas
Investment Commission.
Over the past five months, the board of Abano Healthcare has been conducting a strategic review of the aged care sector,
the market environment and the ElderCare business.
Three options were considered for Abano’s aged care business - growth through acquisition and expansion, release of
capital in the land and buildings through sale and subsequent leaseback, and the sale of part or all of the aged care
portfolio.
Chairman of Abano Healthcare, Mr Jim Syme said: “ElderCare has been a cornerstone business for the Group, and has
provided a platform for our evolvement into the wider medical and healthcare markets.
“However, we believe that the future of the aged care industry in New Zealand lies with substantial organisations who
have a lower cost of capital and who are able to spread administrative costs and achieve the required economies of
scale.
“The aged care sector is very capital intensive, and we would be required to spend significant amounts to maintain and
upgrade existing homes and acquire additional facilities. The board does not believe we would obtain the margins
necessary to achieve our required return on capital. “
A strategic review of the sale option was undertaken in early 2005, after Clavell Capital were appointed in December
2004 to provide experienced and independent assistance.
As a part of this review, and following expressions of interest, a number of industry and investment organisations were
invited to undertake due diligence and submit offers for ElderCare. These offers were evaluated and reviewed by both the
Board and Clavell Capital.
The review has now been concluded and after carefully considering all the options, the board today announced that a
decision has been made to sell ElderCare to The Macquarie Group.
Mr Syme continued: “We believe this decision provides the most positive outcome for the future of ElderCare, its staff
and residents, all of whom will benefit from funding and support from Macquarie, which is a successful and established
organisation with an appropriate capital structure, a long term view and a commitment to continuing our established
quality of care.”
The Macquarie Group is a global investor in infrastructure and essential community services, and ElderCare has been
purchased as a vehicle for Macquarie’s entry into the New Zealand aged care market. Macquarie’s intention is to retain
the business as a long-term investment opportunity and no changes to operations, management structures or staffing are
planned.
Macquarie has also recently acquired Canada’s largest aged care provider, Leisureworld, and, through its investment in
Retirement Care Australia, a portfolio of Australian aged care facilities from the Salvation Army.
The sale will allow Abano Healthcare Group to achieve a higher return on invested capital across the Group and will
facilitate its ability to invest in less capital intensive and more profitable healthcare and medical service
businesses, as well as providing capital funds for the expansion of existing businesses.
Mr Syme said: “The sale will result in a capital profit of approximately $10.5 million and we have decided to return a
portion of this profit to shareholders in coming months. We are satisfied that this will not affect the Group’s ability
to take advantage of a number of attractive investment opportunities currently under negotiation, with announcements on
progress to be made shortly.
“The sale is expected to enhance the Group’s profitability from 2005/06 onwards, with an expected increase in our return
on invested capital. With this in mind, the board believes there will be the ability to initiate an annual dividend
programme by the end of the 2005/06 financial year.”
Abano Healthcare Group also today provided market guidance for its end of year results to 31 May 2005.
Managing Director, Mr Alan Clarke said: “The Group has continued making steady progress in recent months following a
soft start to the financial year.
“We are looking at a full year result to the 31 May 2005 with revenues in the range of $65.0 million to $66.0 million,
an EBITDA of $7.2 million to $7.5 million and a small loss at NPAT.”
- ENDS -
NOTES
• Abano Healthcare Group is New Zealand’s leading listed medical and healthcare services provider, currently operating
in four sectors – Aged Care, Rehabilitation, Diagnostics and Dental.
• Existing subsidiary entities include:
o Abano Rehabilitation - Burtons Healthcare, Health Partners, Ranworth Healthcare
o Abano Diagnostics - Medical Laboratory Wellington, Nelson Diagnostic Laboratories, Ascot Radiology (40 percent)
o Abano Aged Care - ElderCare New Zealand
o Abano Dental - Geddes Dental Group now re-branded Lumino Care Dental, and the Auckland Dental Group
• More information on Abano Healthcare Group is available at
www.abanohealthcare.co.nz
ELDERCARE NEW ZEALAND LIMITED
• ElderCare New Zealand Limited was established in 1997.
• ElderCare has 13 facilities across New Zealand, and employs over 638 staff.
• ElderCare operates rest homes and hospitals and dementia care for older people requiring higher levels of care.
Additionally, ElderCare owns and manages two retirement villages.
• ElderCare provides 740 beds, 69 independent retirement villas and 35 services apartments.
• ElderCare holds approximately 2.4 percent of the aged care residential market.