Vital Healthcare's exposure to Healthscope jumps to A$81M

Wednesday 5th December 2018

Vital Healthcare Property Trust’s exposure to ASX-listed Healthscope has increased to A$81 million, its manager says.

Canada-based NorthWest Healthcare Properties Real Estate Investment Trust, which owns Vital’s management contract, said it has increased its joint option over Healthscope shares to take it and Vital’s stake to 13.4 percent.

That follows on-market purchases of one percent of Healthscope shares.

The option, provided by Deutsche Bank, has an average per share exercise price of A$2.36, down from A$2.39 previously.

Healthscope shares closed yesterday at A$2.28. It owns 43 hospitals concentrated in large metropolitan centres in Australia.

“As previously stated, an acquisition of Healthscope’s underlying hospital-related real estate is of interest to NorthWest and Vital in line with their long-term strategy to invest in healthcare real estate assets in the Australasian market,” NorthWest said in a statement.

“Consistent with the conflicts policy, NorthWest and Vital currently intend to pursue any potential Healthscope real estate acquisition jointly with scope to introduce other capital partners as appropriate,” it said.

“Recognising the above, as an extension of the current loan arrangement with NorthWest, Vital has agreed to lend a further A$40 million – A$81 million in aggregate – to NorthWest,” it said.

NorthWest controls Vital so that’s the same as saying NorthWest has agreed to lend other people's money to itself.

“This additional funding reflects Vital’s proportionate contribution to the funding required to support the acquisition of the 13.4 percent position,” NorthWest said.

“The loan is repayable in 12 months, unless the parties agree to a shorter timeframe. The loan continues to be on arm’s length terms and interest is payable by NorthWest.”

The statement doesn’t say what interest rate NorthWest will pay.

Property giant Brookfield Capital Partners is currently conducting due diligence on Healthscope with a view to making either a takeover offer at A$2.455 per shares or, its preferred option, paying a higher A$2.585 per share if it can take Healthscope over via a scheme of arrangement.

The latter would require a 75 percent vote in favour by Healthscope shareholders.

Healthscope has rejected another takeover proposal from a consortium led by AustralianSuper, which owns 14.5 percent of Healthscope.

Vital units are trading at $2.10, down 2 cents from yesterday, and they have dropped about 3 percent in the last 12 months.

(BusinessDesk)

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