ADVANCED HEALTH LIMITED - Credit facility with related party and fairness opinion

Credit facility with related party and fairness opinion

ADVANCED HEALTH LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/059246/06)
(“the Company” or “Advanced Health”)
ISIN Code: ZAE000189049        JSE Code: AVL


CREDIT FACILITY WITH A RELATED PARTY AND FAIRNESS OPINION

1    INTRODUCTION AND BACKGROUND TO THE CREDIT FACILITY
     In November 2017, the board of directors of Advanced Health (the “Board”) approved the
     Company to enter into a credit facility agreement with Eenhede Konsultante (Proprietary)
     Limited (“Eenhede”), for Eenhede to extend a shareholder’s loan of R50 million, in the form of
     a revolving credit facility, to the Company (“Credit Facility Agreement” or “Credit Facility”).
     Further to the Credit Facility Agreement, the Company entered into a pledge and cession of
     shares agreement with Eenhede, in which the Company agreed to pledge and cede 462 000
     Presmed Australia (Proprietary) Limited (“PMA”) shares to Eenhede as security for the
     outstanding credit facility amount (the “Pledge and Cession Agreement”).

     In May 2018, the Board approved an additional Credit Facility amount from Eenhede to the
     Company of R28.5 million, secured by a further 263 648 PMA shares (the “Second Tranche”).
     The Company and Eenhede entered into addendums to both the Credit Facility Agreement
     and the Pledge and Cession Agreement. The Second Tranche increased the maximum Credit
     Facility amount to R78.5 million and the total number of PMA shares pledged as security to
     725 648 (representing Advanced Health’s 90.8% interest in PMA).

     The Board has approved, and the Company has entered into a second addendum to the Credit
     Facility Agreement to increase the Credit Facility amount with a further R20 million (the “Third
     Tranche”) bringing the maximum Credit Facility amount to R98.5 million. A second addendum
     to the Pledge and Cession Agreement has also been concluded to include the increased Credit
     Facility Amount, although no additional assets have been pledged as security, apart from the
     725 648 PMA shares.

2    RATIONALE FOR THE CREDIT FACILITY AGREEMENT
     The company is in the ramping up phase with new specialist joining, therefore requiring
     additional equipment to be purchased. The loan facility is also utilised for the working capital
     requirements of the company.

3    KEY TERMS OF THE CREDIT FACILITY AGREEMENT
     • The interest rate is the prime rate of interest quoted by ABSA Bank Limited plus 0.5% for
         the duration of the availability period;
     • The Credit Facility is a revolving credit facility which may be repaid and redrawn at any
         time during the availability period;
     • The initial availability period was from 29 August 2017 to 28 August 2019, the repayment
         is no later than 28 October 2019; and
     • The Second Tranche is available until 6 November 2019 and repayable no later than 6
         November 2019;
     • The Third Tranche is available for 12 Months from the effective date 10 June 2019 and
         repayable 60 days of the expiry of the available period.
     •     In terms of the Pledge and Cession Agreement (and addendums thereto), Eenhede has
          the right to take up the full security, of 725 648 PMA shares, that has been pledged to it,
          in the event that AVL breaches the terms of the Credit Facility, even if the value of the
          security exceeds the outstanding amount of the Credit Facility. Eenhede will repay any
          excess amount to the Company that may be applicable.

4    RELATED PARTY TRANSACTION
     Eenhede is an associate company of Mr. Carl Alfred Grillenberger, the Chief Executive Officer
     and majority shareholder of the Company, with an indirect beneficial interest of 58.02%,
     through Eenhede. Eenhede is therefore a related party to the Company as defined in Section
     10 the JSE Listings Requirements.

5    CATEGORISATION OF THE TRANSACTION AND CAUTIONARY ANNOUNCEMENT
     Pursuant to the amendments to the scope of section 10 of the JSE Listings Requirements that
     came into effect in December 2017, read with section 21, both the Second and Third Tranches
     of the Credit Facility are categorised as small related party transactions for AltX issuers (both
     separate and when aggregated) and therefore, is not subject to Advanced Health shareholder
     approval.

6    INDEPENDENT EXPERT OPINION REGARDING THE LOAN AGREEMENTS
     Advanced Health appointed BDO Corporate Finance Proprietary Limited (“BDO”) to provide a
     fairness opinion with regards to the Second and Third Tranches of the Credit Facility. BDO has
     concluded that the terms of the Second and Third Tranches of the Credit Facility are fair to
     Advanced Health shareholders.

     The Board confirms that it is of the opinion that the Second and Third Tranches of the Credit
     Facility is fair insofar as Advanced Health shareholders are concerned, having regard to the
     BDO fairness opinion. Copies of the BDO fairness opinion is available for inspection at
     Advanced Health offices (Building 2, Walker Creek Office Park, 90 Florence Ribeiro Avenue,
     Muckleneuk, Pretoria) for a period of 28 days form the date of this announcement.


Johannesburg
28 June 2019

Designated Advisor
Grindrod Bank Limited

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