Abano proposes $27.3 million capital return
The board of Abano Healthcare Group Limited has today announced a proposed High Court sanctioned, capital return to shareholders of $27.3 million by way of a compulsory cancellation of 1 in every 4 shares held by Abano shareholders.
The capital return is conditional on the settlement of the sale of Abano’s jointly held 13 percent shareholding in NHC Group Pty Limited (NHC) and the approval of Abano shareholders and the High Court. NHC is the Australasian audiology company which acquired Bay Audiology Limited from Abano and interests associated with Bay’s founder Peter Hutson in November 2009.
On 29 September 2010, Abano announced it had sold its 13 percent jointly held shareholding in NHC. Settlement is expected to occur in December 2010, conditional on regulatory approvals, and Abano is expecting to receive in excess of $26 million in cash after NHC debt repayment, sale costs and closing adjustments.
The board of Abano has decided, that subject to shareholder approval of a special resolution at the Abano annual meeting on 30 November 2010 and settlement of the sale of NHC, the excess capital from the NHC sale should be returned to shareholders through a 1 in 4 share cancellation.
Shareholders will receive a cash sum of $5.23 for each share cancelled, being the volume weighted average price of Abano shares over the five trading days prior to 27 October 2010. As the capital return is compulsory and pro rata, the percentage ownership of each shareholder in Abano will remain unchanged after the cancellation has taken place.
Based on shareholder approval at the annual meeting and High Court approval immediately after the annual meeting, it is expected that the cancellation will occur in late December 2010 following settlement of NHC, with shareholders receiving the proceeds of the share cancellation by the end of December.
Chairman of Abano, Alison Paterson, said: “The proposed capital repayment will improve shareholder value through a more efficient capital structure and will maximise distributions to shareholders in a tax effective manner. Once completed, it will result in a decrease in the number of shares on issue and a consequent increase in the earnings per share going forward.
“The board and management of Abano believe the proposed capital return represents an efficient use of the balance sheet while ensuring that Abano retains appropriate funding facilities for future growth.
“There are many further opportunities for growth in Abano’s investment sectors, through audiology into Asia and Australia, dental in New Zealand and Australia, radiology in New Zealand and orthotics in New Zealand. These growth opportunities will continue to be pursued and they will be funded by Abano’s existing and future debt facilities.
“Abano currently has drawn approximately $7 million in New Zealand debt against a facility of NZ $45 million and still retains an Australian facility of A$25 million through CBA, which is in the process of being increased.
“By the end of the 2011 financial year, we expect to have a debt: debt + equity ratio of approximately 30 percent.
“The proposed capital return will be voted on by shareholders at the annual meeting on 30 November 2010. We believe this is a suitable method to provide value to our shareholders and the Abano board recommends shareholders vote in favour of the resolution either in person at the annual meeting or by returning their proxy voting forms at least 48 hours before the annual meeting which is being held at 10:30am on Tuesday 30 November 2010.”