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Vital Healthcare's manager commits to A$1.258 billion Healthscope purchase

Friday 1st February 2019

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The owner of Vital Healthcare Property Trust’s manager has agreed to buy 11 freehold hospital properties from ASX-listed Healthscope for A$1.258 billion but Vital itself isn’t currently a party to the deal.

The conditional deal between Toronto-listed NorthWest Healthcare Properties Real Estate Investment Trust is linked to the scheme of arrangement agreed between Healthscope’s board and Brookfields Business Partners, also announced today.

“Vital is not currently a party to the property transaction. Vital views it as potentially an attractive opportunity and has had significant discussions about its participation in the portfolio with NorthWest.”

While that statement is attributed to Vital in a notice to NZX, Vital has no officers, other than the officers of its manager, so this effectively means NorthWest has been having discussions with itself.

“Those discussions have not as yet resulted in any agreement. Any such participation is subject to being able to reach agreement on commercial terms and documentation with NorthWest,” the statement says.

“Further, any participation by Vital would be subject to compliance with its trust deed and the Financial Markets Conduct Act, including necessarily being in the best interest of unitholders and on arms’ length terms,” it says.

Vital's NZX-listed units fell 1.4 percent to $2.07. 

In a separate statement filed with the ASX, NorthWest says that it has never had an interest in 13.4 percent of Healthscope as previously announced. Instead, that interest, held through a derivatives agreement with Deutsche Bank, is actually 8.74 percent. The higher figure relates to a maximum interest it is able to acquire under the forward agreement it entered into with Deutsche Bank on May 8.

BusinessDesk asked for clarification from NorthWest and a spokesman says Deutsche Bank still has an obligation to supply up to 13.4 percent of Healthscope if NorthWest exercises its rights under the derivatives agreement.

NorthWest has previously said it borrowed A$81 million from Vital to pay for the Healthscope stake.

NorthWest has also previously said that the entry price of its investment in Healthscope equated to A$2.36 per share, the level at which Healthscope shares closed yesterday.

The shares have risen as much as 3.8 percent to A$2.45 since the Brookfields announcement.

Brookfields offer, if its scheme of arrangement succeeds, is A$2.50 per share, valuing Healthscope at A$4.35 billion. That’s lower than its initial A$2.585 per share proposal before it conducted due diligence.

If the scheme – which requires the support of 75 percent of Healthscope’s shareholders voting on a resolution – doesn’t succeed, Brookfields’ offer will be A$2.40 per share, valuing Healthscope at A$4.18 billion, or about A$173 million less.

Brookfields, which is a Canadian company, has reached a separate deal with New York-listed Medical Properties Trust to sell it another 11 of Healthscope’s properties for US$859 million.

If both the MPT and NorthWest deals proceed, Healthscope will lease the 22 properties from their new owners.

In yet another announcement, Healthscope said another suitor, the consortium led by AustralianSuper, has indicated that it could improve on its non-binding offer of A$2.36 per share if it was allowed to conduct due diligence.

“Healthscope notes the correspondence and refers to its announcement earlier today that the company has entered into an implementation deed under which Brookfield undertakes to acquire 100 percent of Healthscope.”

(BusinessDesk)

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