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Metlifecare announces revised merger terms

Monday 21 May 2012, 4:12PM
By Ellis and Co
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Leading retirement village and aged care provider, Metlifecare Limited (NZX: MET), today announced it has agreed revised merger terms for its proposed acquisition of Vision Senior Living Limited (Vision) and Private Life Care Holdings Limited (PLC).

Following announcement of the proposed merger on 7 May 2012, MET management and its independent directors engaged with Metlifecare shareholders and received feedback on the proposed merger.

The engagement revealed general support for the strategic rationale for the transaction, although some areas were identified where an improvement in the transaction terms would deliver a more compelling outcome for Metlifecare’s shareholders. 

The amended agreement announced today incorporates enhancements that add significant value to the merger for existing MET shareholders.

Key variations are outlined in the market presentation (available on the company's website) and include:

Amendments to the Vision terms:

  • VSL shareholders will receive 13m shares on settlement (previously 21m), and;
  • If the five day volume weighted MET share price exceeds $3.00 within 28 months of the merger, VSL shareholders will receive an additional 7 million shares; 
  • All shares issued to Vision shareholders will be held in escrow for 16 months from settlement .

 

Amendments to the PLC  terms:

  • PLC shareholders will receive 29.7m shares (previously 30.5m), and;
  • On settlement of the merger, PLC shareholders will sell down between 16.5m and 22.5m shares;
  • The balance of the RVG shares will be held in escrow for 16 months from settlement1;
  • The sale of RVG’s shares, noted above, will reduce RVG’s shareholding to between 45% and 41% on an undiluted basis and 43% and 40% on a diluted basis.

 

Metlifecare will seek subscriptions for at least $10m additional capital from third party investors rather than Vision shareholders.  Metlifecare will use all the proceeds to pay down debt.

To assist shareholders to better assess the transaction, Metlifecare has also made available additional financial information and clarifications in the market presentation on the basis of the calculation of the forecast increase in the group operating cash flows for FY13 from Vision and PLC. 

The Independent Directors of Metlifecare believe the benefits of the merger announced on 7 May 2012 are compelling:-

  • MET acquires from PLC 3 mature villages
  • MET acquires from Vision Senior Living 3 maturing villages, 2 developing villages and a pipeline of 631 future units
  • MET shareholders benefit through cashflow accretion of 7 cents per share, a 35% increase excluding conditional shares
  • MET acquires an experienced development team
  • MET strengthens its presence in the Auckland market

 

An Independent Appraisal Report has been commissioned from Northington Partners to further assist shareholders to assess the merits of the transaction. This will be made available to all shareholders ahead of a shareholders’ meeting to approve the transaction next month.

“We have worked hard to agree variations with the vendors of Vision and PLC following the feedback from our shareholders and believe the revised terms align the interests of all our shareholders post the merger”, said Metlifecare independent director, Mr Brent Harman.

Independent director, Mr John Loughlin, said: “We strongly believe the merger rationale is very compelling for our Company, it will be immediately cash flow accretive and will provide an enhanced platform for Metlifecare to drive growth and shareholder value. 

“We are pleased that we have been able to reach an agreement on these revisions to the terms, which have our support, and will now proceed to formally presenting this proposal to a shareholders’ meeting in mid-June.”

The transaction is conditional upon Overseas Investment Act approval, shareholder approval, certain third party consents and no material adverse changes.   The parties continue to work towards satisfying all conditions by 30 June 2012, with settlement scheduled for early July 2012. 

ENDS

About Metlifecare:
Metlifecare is a publicly listed aged care and retirement lifestyle company. Established in 1986, the company has a proven track record of successfully owning and managing retirement villages in New Zealand. Metlifecare currently owns villages in prime locations throughout New Zealand, with most providing provide a full continuum of care from independent villas and apartments through to serviced apartments, rest homes and hospitals.  www.metlifecare.co.nz