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 cents 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 in the medium term in order to reduce debt, while improving the dental practices' operations. They would also install three new directors. Since mounting the bid, Healthcare Partners has attracted acceptances totalling about 1 percent of Abano's shares.
Abano today said it has incurred more than $700,000 in costs responding to the partial takeover bid, but hasn't 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"It has now been two months since the second takeover notice was withdrawn by Healthcare Partners and no costs for these notices have been reimbursed since the first or second withdrawn notices," Abano said in a statement. "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 today 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 is still an outstanding debt of more than $185,000.
As part of the takeover bid, Healthcare Partners refused to allow Abano's usual dividend reinvestment plan, and the company today said its directors will buy shares on-market with the dividends they received from their respective shareholdings.
Abano shares last traded at $8.60, and have gained 26 percent over the past 12 months.
The company's valuation range by independent adviser Grant Samuel was criticised by Healthcare Partners as using unrealistic assumptions, and was later 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. It reported a profit of $28.5m on revenue of $213.7m in 2016, although the bottom line included a $21m gain on asset sales.