NZX-listed Metlifecare and two unlisted retirement village operators, Vision Senior Living (VSL) and Private Life Care (PLC), have proposed a three-way merger which, if successful, will create a retirement village operator big enough to challenge market leader, Ryman Healthcare.

The parties have signed off on deal that will involve VSL shareholders receiving 21.0 million Metlifecare shares in exchange for 100 per cent of VSL.

Retirement Village Group owns 51 per cent of Metlifecare and owns PLC outright.

As part of the deal, Retirement Village Group will receive 30.5 million Metlifecare shares in exchange for 100 per cent of PLC.

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In addition, VSL shareholders have agreed to subscribe for 4.2m Metlifecare shares at $2.405 each, with the proceeds used to repay debt.

Metlifecare will also refinance existing VSL and PLC net debt.

Metlifecare last year raised just under $100 million from a share issue and placement.

The company successfully raised $40 million in fresh capital and Retirement Village Group sold down its stake to 51 per cent from 82 per cent.

Metlifecare, with 16 retirement villages, is the largest of the three.

Vision Senior Living, which is 50 per cent owned by Goldman Sachs, was last year touted as a possible initial public offer and share float.

Metlifecare shares last traded at $2.20.