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Category 2 Announcement Regarding The Acquisition Of Netcare Bell Street Hospital (“Bell”) From The Netcare Group
RH BOPHELO LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2016/533398/06)
(JSE Share Code: RHB, ISIN: ZAE000244737)
(“RH Bophelo” or “the Company”)
CATEGORY 2 ANNOUNCEMENT REGARDING THE ACQUISITION OF NETCARE BELL STREET
HOSPITAL (“BELL”) FROM THE NETCARE GROUP (“NETCARE”) AND THE ACQUISITION OF
THE PROPERTY (BEING THE PROPERTY ON WHICH BELL OPERATES) (“BELL PROPERTY”)
FROM NETCARE PROPERTY HOLDINGS PROPRIETARY LIMITED (“NETCARE PROPERTY”)
1. INTRODUCTION
RH Bophelo is pleased to announce that on 15 March 2019 it entered into a Sale of Business
Agreement (“SOB Agreement”) and a Sale of Property Agreement (“SOP Agreement”)
(“Collectively, the Agreements”, through its wholly owned subsidiaries, Demo Medical
Proprietary Limited (“Demo”) and Notamed Proprietary Limited (“Notamed”) (being entities
established specifically for the purpose of the Acquisitions), in terms of which, upon the fulfilment
or waiver (as the case may be) of the conditions precedent contained in the Agreements -
. Demo will acquire 100% of Bell’s assets (being the business) from the existing vendor,
Netcare Hospitals; and
. Notamed will acquire 100% of the Bell Property from the existing vendor, Netcare Property
Holdings.
(collectively the “Acquisitions”).
2. INFORMATION ON BELL
Bell
Bell is a 31 bed private psychiatric hospital situated in Krugersdorp, Johannesburg. Bell was
founded in 1994 as a fully acute care facility and was acquired by Netcare in 2004. Since its
acquisition by Netcare, the hospital was converted to a specialist psychiatric hospital while also
offering the following services:
. Independent radiology services;
. General practitioner services;
. Dental services;
. Dermatology;
. Ear, nose and throat services (ENT); and
. Orthopaedic services.
Furthermore, an additional 20 bed licence is to be transferred from the Netcare Krugersdorp
Hospital, to enable the facility to provide a total of 51 beds. This will however require renovations
to the facility to accommodate the extra beds and RH Bophelo’s plan to expand the facility in the
near future.
Bell Property
The Bell Property includes:
. The property on which Bell operates; and
. The rights and obligations of Netcare Property as lessor in terms of the existing lease
agreement.
The transaction, however, excludes all of the liabilities of Netcare Property as it relates to the Bell
Property.
The Acquisitions
RH Bophelo’s investment into Bell (through Demo and Notamed) (collectively the “Purchasers”)
will be made for a total purchase price of R55.2 million, which is split as follows:
. R1.6 million for the Bell’s assets; and
. R53.6 million for the Bell Property.
Following the Acquisitions, Bell and Bell Property will be 100% held by RH Bophelo.
3. RATIONALE FOR THE ACQUISITION
The Acquisitions represent a strategic opportunity for RH Bophelo to acquire a 100% stake in a
psychiatric facility servicing Johannesburg and enables RH Bophelo to further expand the reach of
its network of hospitals. Furthermore, the Acquisitions provide RH Bophelo with, inter alia, the
following:
. Quick access into an established facility which has a solid foundation and has referring
psychiatric doctors already associated with the hospital;
. The investment will improve the hospitals quality, capacity and service offering, and in so doing
the residents ability to access quality healthcare as set out in RH Bophelo’s mandate;
. An opportunity to invest alongside doctors who have a strong patient base in the Krugersdorp
area and are incentivised to grow the hospital; and
. Combined with RH Bophelo’s previous acquisitions, RH Bophelo believes that it will be able to
extract efficiencies from the operation, leading to additional cost savings and earnings growth.
4. SALIENT TERMS OF THE ACQUISITION
Bell:
RH Bophelo (through Demo) will, inter alia, acquire 100% of the assets of Bell for a total
consideration of R1.6 million which will be paid in cash.
Bell Property:
RH Bophelo (through Notamed) will, inter alia, acquire 100% of the Bell Property for a total
consideration of R53.6 million which will be paid in cash.
5. SUBSIDIARY
The Acquisitions will be made through Demo and Notamed. The terms of Demo and Notamed’s
respective memorandums of incorporation do not in any way influence or relieve RH Bophelo’s
compliance with its obligations in terms of the JSE Listings Requirements.
6. CONDITIONS PRECEDENT
The remaining conditions precedent, in terms of the Acquisitions, which are to be fulfilled or waived
(as the case may be or on such later date as the parties may agree to in writing), are as follows:
. Within 30 (thirty) days of the Signature Date, the purchasers being registered as a VAT
vendor in terms of the VAT Act, and providing the Netcare Property Holdings and Netcare
Hospitals with a copy of its VAT registration certificate (VAT 103);
. By no later than 23:59 on the thirtieth Business Day following the signature date, the Board
of Directors of Netcare Property Holdings and Netcare Hospitals having resolved, in writing,
to conclude this Agreement, proof of which shall be an extract of a meeting of the Board of
Directors, certified as a true excerpt, by the Chairman of the meeting at which the Directors
resolved to conclude this Agreement;
. Within 20 (twenty) days from the date on which the Purchasers provide Netcare Property
Holdings and Netcare Hospitals with a copy of the VAT registration certificate, the requisite
approval of the Department of Health & Social Development, Gauteng Province
(“Department”) for the issue and/or transfer of the License and the delivery to the
Purchasers of the relevant certificate is obtained; and
. Within 20 (twenty) days from Signature Date, the requisite approval from the Department for
the implementation of the transaction is obtained.
7. FINANCIAL INFORMATION
Bell
The latest unaudited management accounts (prepared in accordance with IFRS), for the 6 month
period ending 31 August 2018, of which RH Bophelo is satisfied, showed that Bell had assets
(subject matter of the transaction) of R0.8 million and a net profit after tax of R0.7 million.
Bell Property
Details of the Bell Property are as follows:
Location: ERF 1690 and ERF 3288, Noordheuwel Extension 3, Krugersdorp,
Mogale City, Gauteng
Rentable area: 2,618m2
Valuation: (Note 1) R43.2 million (March 2018)
Note 1 – This is per an independent external valuation which valuation has been derived based on the “continuation of existing use”
method.
8. EFFECTIVE DATE
The effective date of the transaction is expected to be on or about 31 May 2019 (subject to the
Conditions Precedent noted above).
9. CATEGORISATION
The Acquisitions qualify as Category 2 transaction in terms of the JSE Listings Requirements and
as a result do not require shareholder approval.
10. INITIAL THRESHOLD
As noted in RH Bophelo’s investment policy, in order to provide shareholders with additional
protection, shareholders are afforded the opportunity to vote on specific transactions up to a
threshold of R300 million, however, subject to the categorisation requirements of Section 9 of the
JSE Listings Requirements. As a result, following the Acquisitions and previous acquisitions made
since listing, RH Bophelo requires approval from shareholders (subject to section 9 of the JSE
Listings Requirements) for further transactions of R8.4 million.
Johannesburg
18 March 2019
Sponsor to RH Bophelo: Deloitte & Touche Sponsor Services Proprietary Limited
Legal Advisor to RH Bophelo: Motsoeneng Bill Attorneys Incorporated
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