A long-time shareholder in Bay International will exit as interests associated with Peter Hutson move to buy out Abano Healthcare Group's half stake in the audiology company for $32 million.
The Scott and Alison Wright Family Trust currently own 11 per cent of Bay International. Wright would take advantage of the transaction with Abano to exit the investment in both the audiology business and Abano itself, according to substantial security holder notices today.
The complex transactions would see the involvement of another Abano shareholder, James Reeves, whose Steamboat Capital teamed up with Hutson and Archer Capital in 2013 for what was a hostile and unsuccessful takeover proposal for Abano. A separate company owned by Steamboat and the Hutsons, Healthcare Partners Finance, would advance funds to the Hutson's SF No. 2 Trust to enable it to buy out the Wrights' interests in Bay International and Healthcare Industry and to pay for the Abano's half stake in Bay International.
The various disclosures today don't explicitly say whether interest associated with Reeves will end up with a shareholding in Bay International.
The SF No. 2 Trust would acquire all of the shares held by the Wrights in Bay International and Healthcare Industry, a joint venture company between the Hutsons and the Wrights that is the beneficial owner of about 3 million Abano shares. The price SF No. 2 Trust would pay Wright Trust for its shares in, and shareholder loans to Healthcare Industry would be about $4.8 million.
That acquisition was likely to be subject to approval by Abano's shareholders and the Hutson's acquisition of Abano's Bay International stake may also be "subject to any necessary shareholder or regulatory approvals", today's statements said.
The Hutsons and Wrights have pre-emptive rights to buy Abano's shares in Bay International under the audiology business's shareholder agreement, which allows them to buy the shares at the same price. Abano got an unsolicited approach from an international hearing device manufacturer, which it hasn't identified, last month. The price of $32 million is almost three times Abano's book value for its share of Bay, which owns Bay Audio, an audiology retail network in Australia with a smaller footprint in South East Asia.
Abano chief executive Richard Keys said the sale would generate a surplus over book value of approximately $20 million once Abano's A$1.8 million share of Bay Audio Australia's deferred tax asset was recognised. The sale was in keeping with Abano's focus on its growing trans-Tasman dental business.
Abano said excluding the impact of the Bay sale, its results for the 2016 financial year would be at the top end of the $8.2 million to $9 million underlying profit guidance it gave on April 7. Profit in 2015 was $8.8 million, or $5.6 million excluding two businesses it has since sold.
Proceeds from the Bay sale will be used to repay debt and help fund Abano's continued expansion of its Lumino The Dentists network in New Zealand and Maven Dental Group in Australia, Keys said.
Steamboat's substantial security holder says it has an understanding with SF No. 2 Trust and Healthcare Industry that in the event SF No. 2 Trust acquires the Wright Trust's shares in Bay International but doesn't become the sole shareholder, then Healthcare Industry will transfer its shares in Abano to Steamboat at a price of $7.50 per Abano share.
The SF No. 2 Trust and Steamboat Capital "may, from time to time, engage in discussions regarding their intentions, and agree to act in concert, in respect of the shares in Abano in which they have a relevant interest," it said.
Abano shares rose 1.3 percent to $7.75 and have edged up 1.6 percent in the past 12 months.