GBP80 million financing

RNS Number : 2194F

Assura Group Limited

07 October 2008

 



This announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Canada, South Africa, Australia, Japan or any jurisdiction in which the same would be unlawful. This announcement is not an offer of securities in the UK, United States, Canada, South Africa, Australia, Japan or any jurisdiction in which the same would be unlawful.

For immediate release

7 October 2008

Assura Group Limited ('Assura' or the 'Company')

£80 million financing to support GP focused business plan

Assura today announces proposals to raise a total of £80 million via an equity fundraising of £30 million and debt financing of £50 million to support its business plan as it continues to transform from being a medical property investor and developer to being a GP focused healthcare group. The Board has adopted a focused business plan to concentrate resources on its medical operating business and GP Provider Companies ('GPCos') and will utilise the funds raised to implement this plan.

Highlights

• Proposed Placing of 81,081,080 new Ordinary Shares at 37p per share, a discount of 9.8 per cent. to yesterday's closing mid-market price of 41 pence, raising £30m (before expenses) of new equity;  
• In addition to Assura's existing banking facilities, credit committee approval granted on 11 new long term loans totalling £50m to be secured on property assets and developments;
• Future capital expenditure to be targeted towards GPCo areas and related medical and pharmacy services;
• Planned disposals of certain property and pharmacy assets; and
• Revised dividend policy to only pay dividends covered by operating earnings, although the Board intends to distribute cash to shareholders from the net proceeds realised from the planned disposals of certain property and pharmacy assets by way of special dividend.

A Prospectus relating to the Placing and a notice of an Extraordinary General Meeting to consider the proposals will be posted to shareholders as soon as practicable.

Chief Executive, Richard Burrell commented: 'With this increased financing package, Assura will be very well positioned to take advantage of the exciting new opportunities as the Government further opens up the provision of NHS primary care services to the private sector. The medical operating business and our GPCos will require significant investment over the next three years to turn them into cash generative and profitable businesses and I believe the measures we have announced today will give us the headroom we need to pursue our GPCo focused objectives. Additionally, given the focus on GPCos, the Company will look to realise value from certain property and pharmacy assets and the Board intends to distribute cash to shareholders from the net proceeds realised from these disposals by way of special dividend.'

There will be a conference call for analysts at 09.00am today. For details please call Mo Noonan at Financial Dynamics on [phone].

ENQUIRIES:

Assura Richard Burrell, Nigel Rawlings, Louise Bathersby		020 7107 3800
Cenkos Securities Nicholas Wells		020 7397 8900
Financial Dynamics David Yates, Ben Atwell		020 7831 3113

Cenkos Securities plc, which is authorised and regulated by the Financial Services Authority, is acting for Assura Group Limited and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than Assura Group Limited for providing the protections afforded to its customers or for providing advice to any other person in relation to the matters referred to in this announcement. 

This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to acquire, purchase or subscribe for any securities. This announcement has not been examined or approved by the Financial Services Authority or the London Stock Exchange or any other regulatory authority. The distribution for this announcement in certain jurisdictions may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction  

This announcement and the information contained herein does not constitute an offer to sell, exchange or transfer any securities of the Company and is not soliciting an offer to purchase, exchange or transfer such securities in any jurisdiction where the offer, sale, exchange or transfer is not permitted or to any person or entity to whom it is unlawful to make that offer, sale, exchange or transfer.

This announcement and the information contained herein are not an offer for sale of securities in or into the United States, Canada, South Africa, Australia, Japan or in any other jurisdiction and the information contained herein is not for publication or distribution in or into the United States, Canada, South Africa, Australia or Japan . The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933 (the 'Act'), as amended, and may not be offered or sold in the United States or to or for the account or benefit of US persons (as such term is defined in Regulation S under the Act) absent registration under the Act or an available exemption from registration. No public offering of the securities referred to herein will be made in the United States.  

The information contained in this announcement is not for publication or distribution to persons in Australia, Canada, Japan or South Africa. The shares referred to herein may not, directly or indirectly, be offered, sold, taken up or delivered in, into or from Australia, Canada, Japan or South Africa.

Certain statements in this announcement are forward looking statements.  Such statements speak only at the date of this announcement, are based on current expectations and beliefs and, by their nature, are subject to a number of risks, uncertainties and assumptions because they relate to events and/or depend on circumstances that may or may not occur in the future and could cause actual results to differ materially from those expressed in, or implied by, the forward looking statement. Forward looking statements contained in this announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Subject to any requirement under the Listing Rules of the UK Listing Authority, the Disclosure Transparency Rules, the Prospectus Rules, the London Stock Exchange or otherwise by law, neither the Company nor Cenkos Securities plc assume any responsibility or undertakes any obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward looking statements, which speak only as of the date of this announcement. No statement in this announcement is intended to be a profit forecast or to imply that the earnings of the Company for the current year or future years will necessarily match or exceed the historical or published earnings of the Company.

This announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Canada, South Africa, Australia, Japan or any jurisdiction in which the same would be unlawful. This announcement is not an offer of securities in the UK, United States, Canada, South Africa, Australia, Japan or any jurisdiction in which the same would be unlawful.

assura group limited ('assura' or the 'Company')

£80 MILLION FINANCING TO SUPPORT GP FOCUSED BUSINESS PLAN

1.    INTRODUCTION

The Board of Assura (the 'Board') is pleased to announce a conditional placing (the 'Placing') of 81,081,080 new ordinary shares of 10 pence each in the share capital of the Company (the 'New Ordinary Shares') to raise £30m.

The New Ordinary Shares have been conditionally placed with investors on behalf of the Company by Cenkos Securities plc ('Cenkos Securities') at a price of 37 pence per New Ordinary Share (the 'Issue Price'), a 9.8 per cent. discount to yesterday's closing mid-market price of 41 pence. The New Ordinary Shares represent approximately 25.6 per cent. of the Company's enlarged issued ordinary share capital.

The New Ordinary Shares will, when issued, be credited as fully paid and will rank equally in all respects with the existing ordinary shares of 10 pence each in the capital of the Company ('Ordinary Shares'), including the right to receive all dividends and other distributions declared, made or paid in respect of such Ordinary Shares after the date of issue of the New Ordinary Shares.

A prospectus relating to the Placing (the 'Prospectus') and a notice of an extraordinary general meeting of the Company ('Extraordinary General Meeting'), which will be convened for the purpose of passing certain resolutions required in connection with the Placing, will be posted to shareholders shortly.  

The Company has also received confirmation of credit committee approval from Norwich Union Commercial Finance, part of the Aviva Group, of 11 new long term loans totalling £50m secured on property assets and developments.

2.    BACKGROUND TO AND REASONS FOR THE PLACING 

Demographic, technological and cost pressures in the UK are forcing fundamental changes to the way that the NHS is run and delivers its services to patients. Over the course of the last five years, Assura has positioned itself to accommodate these changes - the shift from secondary hospital-based services to primary community-based services, the opening of markets to private providers and a move by the NHS itself from being a monopoly provider of services to being a commissioner and procurer of those services from a range of providers. These trends now provide the bedrock of NHS reform, supported by the three major political parties, and which the Company believes will gradually open up the £123bn NHS annual budget to private companies as more and more medical services are made available for third parties to provide.

Assura has evolved very rapidly into a primary and community care provider organisation. With strong asset backing from its property division, it has been able to offer modern integrated facilities to its GP partners, PCTs, pharmacists and patients, which the Directors believe are suited to the evolving NHS and are capable of undertaking many medical services, such as out-patient and diagnostic procedures, which have hitherto been carried out in hospitals. The Group's investment in its joint venture partnerships with GPs ('GPCos') and the development of its pharmacy operating business will all take time to mature but encouraging progress is being made across a number of geographical locations.

The Board believes Assura is now very well positioned to take advantage of the exciting new opportunities as the Government further opens up the provision of primary care services to the private sector.

Given the significance of this investment, the Board believes that the Company should concentrate its resources on its GPCos and accordingly new capital expenditure will primarily be committed to the development of medical services, property development and pharmacy services which are aligned to its existing or potential GPCo areas. 

To date Assura has confined its debt facilities to secured property lending only. Accordingly, the Company has no debt facilities secured on its operating businesses. In order to maximise shareholder value in an economic climate where credit is constrained, the Company intends to fund the continued investment in its medical and pharmacy operating businesses from the proposed equity placing, surplus rents and debt facilities secured on its property assets. It also intends to undertake disposals of certain assets.  The disposals process will be carefully managed to ensure optimal value is generated. The Placing and additional debt facilities announced today provide the Company with the necessary flexibility to implement this strategy.

3.    THE PLACING

Application will be made for the New Ordinary Shares to be admitted to the Official List maintained by the UK Listing Authority and to be admitted to trading by the London Stock Exchange plc on its market for listed securities (together, 'Admission'). The Placing is conditional upon the publication of a prospectus and on the passing of resolutions to be proposed at the Extraordinary General Meeting.

Cenkos Securities has entered into a placing agreement (the 'Placing Agreement') with the Company pursuant to which it has, on the terms and subject to the conditions set out therein, undertaken to use its reasonable endeavours as agent of the Company to procure placees to subscribe for the New Ordinary Shares.

Cenkos Securities has conditionally placed all of the New Ordinary Shares at the Issue Price. The pre-placing is conditional upon the placing agreement having become unconditional in all respects and not having been terminated prior to Admission.

Cenkos Securities' obligations under the Placing Agreement are conditional on, inter alia:

 

a.      the issue of the Prospectus on or before 24 October 2008 (or such other time and/or date as the Company and Cenkos Securities may agree);

 

b.      Admission occurring not later than 8.00 a.m. on 11 November 2008 (or such other time and/or date as the Company and Cenkos Securities may agree);

 

c.      the warranties contained in the Placing Agreement being true and accurate and not misleading at all times before Admission; and

 

d.      to the extent material in the context of the Placing, the Company complying with its obligations under the Placing Agreement to the extent the same fall to be performed prior to Admission.

 

4.    PLACING, SHARE STATISTICS AND TIMETABLE OF PRINCIPAL EVENTS

Issue Price	37p
Number of New Ordinary Shares	81,081,080
Number of Ordinary Shares in issue immediately following Admission	317,025,860
Market capitalisation upon Admission at the Issue Price	£117.3 million
Percentage of the enlarged issued ordinary share capital represented by the New Ordinary Shares	25.6 per cent.

A timetable setting out the expected timing of principal events will be published in the Prospectus and will be notified via a regulatory information service. 

5.    DEBT FINANCING

In addition to Assura's existing banking facilities, the Company has received confirmation of credit committee approval from Norwich Union Commercial Finance, part of the Aviva Group, relating to 11 new long term loans totalling £50m secured on property assets and developments.

The loans will be secured on 11 unencumbered development and investment properties. Two of the loans have completed already and the remaining nine are in legal hands and are expected to be completed by the end of 2008.  The terms of the loans range from 12 to 21 years.  These facilities are in addition to the Company's existing credit facilities with Norwich Union Commercial Finance, National Australia Bank and The Royal Bank of Scotland plc which remain unchanged.  

The Company is awaiting the 30 September 2008 independent valuation of its portfolio of 122 investment properties which is due imminently. Whilst yields have widened during the course of this year, valuations in this sector have not been affected as badly as the rest of the commercial property market due to the length of leases, covenant strength and recent rental growth evidence. 

The Company continues to remain encouraged by the progress of its individual rent reviews with those settled since the beginning of the financial year showing an average annual increase ahead of management's expectations.

6.    DIVIDEND AND ASSET DISPOSAL PROGRAMME

The Board has decided that it would not be prudent for Assura to continue the Company's progressive ordinary dividend policy and expects that payments of ordinary dividends will be suspended until such time that these can be covered by operating earnings. However, the Board intends to dispose of certain property and pharmacy assets and the Board intends to distribute cash to shareholders from the net proceeds realised from such asset disposals by way of special dividend.

ENQUIRIES:

Assura Richard Burrell, Nigel Rawlings, Louise Bathersby		020 7107 3800
Cenkos Securities Nicholas Wells		020 7397 8900
Financial Dynamics David Yates, Ben Atwell		020 7831 3113

Cenkos Securities plc, which is authorised and regulated by the Financial Services Authority, is acting for Assura Group Limited and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than Assura Group Limited for providing the protections afforded to its customers or for providing advice to any other person in relation to the matters referred to in this announcement. 

This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to acquire, purchase or subscribe for any securities. This announcement has not been examined or approved by the Financial Services Authority or the London Stock Exchange or any other regulatory authority. The distribution for this announcement in certain jurisdictions may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.  

This announcement and the information contained herein does not constitute an offer to sell, exchange or transfer any securities of the Company and is not soliciting an offer to purchase, exchange or transfer such securities in any jurisdiction where the offer, sale, exchange or transfer is not permitted or to any person or entity to whom it is unlawful to make that offer, sale, exchange or transfer.

This announcement and the information contained herein are not an offer for sale of securities in or into the United States, Canada, South Africa, Australia, Japan or in any other jurisdiction and the information contained herein is not for publication or distribution in or into the United States, Canada, South Africa, Australia or Japan . The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933 (the 'Act'), as amended, and may not be offered or sold in the United States or to or for the account or benefit of US persons (as such term is defined in Regulation S under the Act) absent registration under the Act or an available exemption from registration. No public offering of the securities referred to herein will be made in the United States.  

The information contained in this announcement is not for publication or distribution to persons in Australia, Canada, Japan or South Africa. The shares referred to herein may not, directly or indirectly, be offered, sold, taken up or delivered in, into or from Australia, Canada, Japan or South Africa.

Certain statements in this announcement are forward looking statements.  Such statements speak only at the date of this announcement, are based on current expectations and beliefs and, by their nature, are subject to a number of risks, uncertainties and assumptions because they relate to events and/or depend on circumstances that may or may not occur in the future and could cause actual results to differ materially from those expressed in, or implied by, the forward looking statement. Forward looking statements contained in this announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Subject to any requirement under the Listing Rules of the UK Listing Authority, the Disclosure Transparency Rules, the Prospectus Rules, the London Stock Exchange or otherwise by law, neither the Company nor Cenkos Securities plc assume any responsibility or undertakes any obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward looking statements, which speak only as of the date of this announcement. No statement in this announcement is intended to be a profit forecast or to imply that the earnings of the Company for the current year or future years will necessarily match or exceed the historical or published earnings of the Company.

 

END

 

 

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