AVL drops 8% after reducing stake in PMA

ADVANCED Health Limited (AVL) fell nearly 8 percent on the JSE yesterday after the healthcare group said it had reduced its stake in Presmed Australia (PMA) by 3.8 percent to 90.84 percent.

The shares closed 7.35 percent lower at 63 cents as AVL said it had decided to offload the stake after the Australian subsidiary managed to raise A$1.68 million (R16.9m) through loans from directors and associated companies.

Advanced Health said it would allocate A$0.75m of the raised amount to the issuance of new shares in PMA.

It said the remaining A$0.93m would be retained by PMA as long-term loans, adding that the loans would be expected to attract a 5.5 percent interest rate per annum and be repayable in cash at the end of two or three years.

Advanced Health said the parties would have an option to request the conversion of the outstanding long-term loans to shares, subject to consent at the time of the request and at a subscription price to be determined by PMA. The group said a portion of the loans were converted to equity at a share price of A$23.37 a PMA share, which diluted AVL’s shareholding in PMA by 3.8 percent, from 94.64 percent to 90.84 percent.

It said the disposal was made in terms of the listings requirements of the JSE.

Presmed Australia, one of the leading healthcare companies in Australia, specialises in the establishment and management of surgical day hospitals. It operates five facilities across the major urban regions of New South Wales.

“PMA is utilising the funds raised for its ongoing expansion and support of its Australian day hospitals, creating a stable and strong platform for each facility, and to have the financial ability to grow the business. Part of the funds raised has also been used to pay back current bank loans, which attracted a higher interest rate,” the group said.

AVL said that if the parties requested and PMA approved the conversion of the long-term loans, it may lead to further dilutions of AVL’s shareholding.

Last year, AVL raised R86.2m through a rights offer to fund its growth and expansion strategy.

The group said its board also advised that the funds raised should be retained for the ongoing growth of the South African day hospital business.

Concurrently, PMA required funding for its ongoing expansion and support of its Australian day hospitals, which was approved and supported by the AVL board, the group said.

PMA reported net assets of R120.82m for the year to end June 2017, with revenue of R218.80m and a net profit after tax of R1.18m.