Abano Healthcare uses dividend to offset cost of partial takeover bid

Abano Healthcare has used Healthcare Partners Holdings’ interim dividend to offset the cost of a partial takeover mounted by the medical investor’s biggest shareholder.

Auckland-based Abano has applied the 16 cent per share interim dividend payable to Healthcare Partners, an entity owned by cornerstone shareholders Anya and Peter Hutson and James Reeves, to the mounting bill associated with the group’s partial takeover offer.

The board has recommended investors reject the offer.

Healthcare Partners held about 19 per cent of Abano’s stock when it mounted a $10-per-share offer for 50.01 per cent of the healthcare company, including the interim dividend.

The Hutsons and Reeves want to improve the company’s performance by halting acquisitions to reduce debt, while improving the dental practices’ operations.

Since mounting the bid, Healthcare Partners has attracted acceptances totalling about 1 per cent of Abano’s shares.

Abano yesterday said it had incurred more than $700,000 in costs responding to the partial takeover bid, but had not received any payments or acknowledgement for invoices issued since November.

“It has now been two months since the second takeover notice was withdrawn by Healthcare Partners and no costs for these notices have been reimbursed since the first or second withdrawn notices,” Abano said.

“To ensure Abano’s shareholders do not continue to be disadvantaged, Abano has withheld from Healthcare partners the 16-cent per share dividend paid by Abano [yesterday] to shareholders, and applied it to the unpaid invoices in relation to costs incurred or committed to prior to Healthcare Partners’ withdrawal of their second notice in November 2016.”

Healthcare Partners’ dividends would have totalled $653,339.08 and Abano said there was still an outstanding debt of more than $185,000.

As part of the bid, Healthcare Partners refused to allow Abano’s usual dividend re-investment plan, and the company said its directors would buy shares on-market with the dividends they received from their respective shareholdings. Abano shares last traded at $8.60. The company’s valuation range by independent adviser Grant Samuel was criticised by Healthcare Partners as using unrealistic assumptions, and was revised to reflect shares issued as part of management’s long-term incentive scheme, putting a fair value of between $9.92 and $11.93, from $9.95 to $11.96.

Abano affirmed annual earnings guidance from the Grant Samuel report, projecting profit of $10.2 million on revenue of $236.2m.