Listed hospital group Medi-Clinic on Monday announced a black economic empowerment (BEE) transaction valued at R1,1-billion in which it plans to sell a 15% equity stake to strategic black empowerment partners (with 11%) and participating Medi-Clinic staff (4%), based on a share price of R18,40 per Medi-Clinic share.
The company also unveiled a capital restructuring which will see the group distribute a special dividend of R4,02 per share, amounting to R1,6 billion
rand.
In terms of its empowerment transaction, Medi-Clinic said its strategic black partners, Phodiso and Circle Capital, would hold stakes in Medi-Clinic of approximately 6,9% and 4,1%, respectively, on completion, via two special purpose vehicles, Mpilo Investment Holdings 1 and Mpilo Investment Holdings 2.
Staff participation would take place through the issue of new Medi-Clinic shares to an employee share trust (the Mpilo Trust), representing a 4% stake in the enlarged company. The trust would benefit approximately 10Â 927 participating employees, of whom 52% were black and 89% were women.
The level of staff participation would be linked to length of service at Medi-Clinic in order to reward loyalty and dedication to the company, it added.
In terms of the capital restructuring, the company said it had decided to introduce debt funding totaling R700-million arranged by Standard Bank, which would be used to pay down existing debt and leave sufficient additional funds for future strategic initiatives.
The board declared a special dividend of R4,02 per share, which, taking into account the envisaged enlarged number of shares in issue after its empowerment transaction, was valued at a total of R1,6-billion.
The special dividend would be payable to all shareholders upon completion of the BEE deal.
Medi-Clinic estimated the economic cost of the BEE transaction at R224,1-million, or 3,48% of the company’s market capitalisation. The combination of the BEE transaction and the special dividend would reduce Medi-Clinic’s headline earnings per share by 54,3%, to 66,6 cents from 145,7 cents prior to both deals.
Phodiso, one of Medi-Clinic’s new empowerment partners, is a focused healthcare group that owns and operates a number of successful businesses focused on the provision of quality healthcare services. It is owned and operated by a group of 64 healthcare practitioners and business people, with a black ownership component of 94,4%.
The company has already partnered with Medi-Clinic on a number of initiatives, including a 20,6% interest in Curamed and a 49% interest in Protector. Two of its directors, Dr Nkaki Matlala and Dr Vincent Msibi, would be involved in the future management of Medi-Clinic, it added.
Circle Capital, meanwhile, is a blue chip investment holding company that participates in investments in order to add value to and grow established
companies, assisting them in transformation. It was founded by Hlumelo Biko and
Blessing Rugara in 2002, and had assembled a highly skilled and experienced
executive management team with a demonstrated track record of success in the private equity and BEE investment arenas.
The Ramphele Family Trust, of which Dr Mamphela Ramphele is a beneficiary, holds a 24,7% stake in Circle Capital Holdings, which in turn holds a 64% interest in Circle Capital. Ramphele had thus recused herself from the Medi-Clinic board’s decision making in respect of the BEE deal, the company noted.
The structuring of the transaction would see the Mpilo companies, as wholly-owned subsidiaries of Phodiso and Circle Capital, issue preference and ordinary shares.
Standard Bank would subscribe for A preference shares in each of the companies pro-rata to their proposed shareholding in Medi-Clinic for a total of R200-million.
The two BEE partners would subscribe for ordinary shares in each of the Mpilo Companies pro-rata to their Mediclinic shareholding for a total of R80-million rand.
The transaction is subject to a number of conditions, including shareholder approval. A scheme meeting is set for November 23. – I-Net Bridge