Abano Healthcare shares shot up 36 per cent this morning after it announced the sale of ElderCare New Zealand to Macquarie Bank Limited for $63.5 million.
Shares in Abano rose 42c to $1.60 after the news, having traded between $1.00 and $2.10 over the past 12 months.
The sale is
conditional on approval from Abano's shareholders and the Overseas Investment Commission. Abano said in a statement settlement was expected by the end of July 2005.
A special shareholders' meeting will be held on June 27 to vote on the deal.
Abano chairman Jim Syme said in a statement the sale would free up funds to invest in less capital intensive and more profitable healthcare and medical service businesses, as well as expanding Abano's existing businesses.
As well as further investments, a portion of the $10.5 million capital profit from the sale will go to shareholders via a capital return.
Mr Syme said the sale was expected to boost Abano's profitability, and the group expected to be able to start an annual dividend programme by the end of this year.
Mr Syme said Abano was looking at a small net loss for the year, and earnings before interest, tax, depreciation and amortisaion (ebitda) of between $7.2m and $7.5 million, and revenue of $65m to $66m.
Abano reported a net profit of $450,000 for the year ended May 2004, with ebitda of $7.1 million.
Abano said the decision to sell ElderCare followed a strategic review of the aged care sector and the market environment.
Mr Syme said while ElderCare had been a cornerstone business for the group, Abano believed the future of the aged care sector was with larger organisations with better economies of scale.
"The aged care sector is very capital intensive, and we would be required to spend significant amounts to maintain and upgrade existing homes and acquire additional facilities," he said in a statement.
The purchase of ElderCare marks Macquarie's entry into the New Zealand aged care market. Abano said there would be no changes to operations, management structures or staffing with the ownership change.
- NZPA
