15th Mar 2007 07:04
Primary Health Properties PLC15 March 2007 15 March 2007 Primary Health Properties PLC ("PHP" or the "Company") Proposed Placing and Open Offer of up to 9,309,376 New Ordinary Shares at 430p per share Primary Health Properties, the Official Listed and dedicated healthcare UK-REIT,which is one of the UK's largest providers of modern primary healthcarefacilities, today announces that it has agreed, subject to shareholder approval,to raise approximately £38.6m million (net of expenses) by way of a Placing andOpen Offer at 430p per share. Once approved by shareholders, the funds willprovide increased working capital for PHP, increasing PHP's capacity for furthergrowth. The Placing and Open Offer Highlights * Placing and Open Offer to raise approximately £38.6 million (net of expenses) * 7,441,860 New Ordinary Shares to be placed with institutional and other investors, such Placing is underwritten by Numis Securities * Open Offer of 1,867,516 New Ordinary Shares to Qualifying Shareholders * Issue price of 430p per share which represents a discount of approximately 4 per cent to the closing middle market price on 14 March 2007 (the last business day preceding the announcement of the Placing and Open Offer) * Use of proceeds: - provide increased working capital for PHP - increase PHP's capacity for further growth - enable the Company to take advantage of increased opportunities to purchase property portfolios * The Placing and Open Offer are subject to the approval of Shareholders which is to be sought at an EGM to be held on 11 April 2007 * The Prospectus describing the terms of the Placing and Open Offer is expected to be posted to shareholders later today. * PHP has also today announced its interim results to 31 December 2006. Highlights include: o NAV per share of 421p o Interim dividend of 7.5p per share Commenting on the proposed Placing and Open Offer, Harry Hyman, ManagingDirector of Primary Health Properties, said: "We are delighted to have secured significant new capital from both new andexisting investors. Our shareholders continue to recognise the long term growthpotential of Primary Health Properties and its commitment to deliver attractivereturns for shareholders. With this additional capital we will look forward toaccelerating the expansion of our property portfolio. We are confident that PHPwill continue to deliver excellent shareholder value." -ends- For further information please contact Primary Health Properties PLCHarry Hyman, Managing Director Tel: 07973 344768 Numis SecuritiesDavid Poutney/ /David Shapton Tel: 020 7776 1500 Bell PottingerDavid Rydell/ Victoria Geoghegan Tel: 020 7861 3232 The Placing and Offer The Board today announces that it is proposing to raise approximately £38.6million (net of expenses) by way of the Placing and Open Offer at 430p per sharein order to provide working capital for PHP and thus increase capacity forfurther growth. Numis Securities, PHP's sponsor, stockbroker and underwriter,has agreed to use reasonable endeavours to procure subscribers for, or failingwhich itself to subscribe for, new ordinary shares not taken up under thePlacing. The Placing and Open Offer is conditional upon the approval of Shareholders atthe forthcoming Extraordinary General Meeting. The purpose of the Prospectusexpected to be published later today is to; (i) set out the terms of the Placingand Open Offer; (ii) explain why the Board considers the Placing and Open Offerto be in the best interests of the Company and its Shareholders; and (iii)convene the Extraordinary General Meeting at which the Resolutions will beproposed. The Extraordinary General Meeting is to be held on 11 April 2007, at 11am at theregistered office of PHP; Ground Floor, Ryder Court, 14 Ryder Street, LondonSW1Y 6QB. PLACING AND OPEN OFFER STATISTICS Number of New Ordinary Shares pursuant to the Placing: 7,441,860Number of New Ordinary Shares pursuant to the Open Offer: Up to 1,867,516Number of Ordinary Shares in issue following completion of thePlacing and the Open Offer:(assuming full subscription) 33,587,094Issue Price: 430pEstimated net proceeds of the Placing and Open Offer: £38.6 million Market capitalisation of the Company at the Issue Price followingcompletion of the Placing and Open offer (assuming full subscriptionunder the open offer): £144.4 million EXPECTED TIMETABLE OF PRINCIPAL EVENTS Event Time and Date Record Date for entitlement under the Open Offer Close of business on 14 March 2007Despatch Prospectus 15 March 2007 Latest time and date for splitting Application Forms (to satisfy 3pm on 4 April 2007bona fide market claims only) Latest time and date for acceptance and payment in full 3pm on 10 April 2007 Latest time and date for receipt of Forms of Proxy 11am on 9 April 2007 Extraordinary General Meeting 11 am on 11 April 2007 Dealings in New Ordinary Shares to commence 8 am on 12 April 2007 CREST Stock Accounts to be credited 12 April 2007 Despatch of definitive certificates for New Ordinary Shares 18 April 2007 Each of the times and dates in the above timetable is subject to change, inwhich event details of the new times and/or dates will be notified to the UKListing Authority and the London Stock Exchange and, where appropriate,Shareholders. References to times in this document are to London time. Pleasenote that any Existing Ordinary Shares sold prior to the close of business on 14March 2007, the Business Day before the Existing Ordinary Shares will tradeex-entitlement, will be sold to the purchaser with the right to receiveentitlements under the Open Offer. BACKGROUND TO AND REASONS FOR THE PLACING AND OPEN OFFER AND USE OF PROCEEDS The Directors believe that following the Company's conversion on 1 January 2007to a UK-REIT there will be increased opportunities to purchase portfolios ofproperties and wish to be in a position to take advantage of these. The Company is not allowed to have a rental to interest ratio of less than 1.25times under UK-REIT legislation. Using its existing capital base of some £102million as at 31 December 2006, the Group could therefore grow its portfolio toa maximum of some £400m although in practice a slightly lower maximum wouldprevail in order to allow operating flexibility to the Group. The publicity surrounding the launch of UK-REITs and the Company's position inthe vanguard of companies converting to UK-REIT status have also raised theprofile of the Group. The results for the six months to 31 December 2006 alsoannounced today reflect a period of strong performance and the Directorsconsider it an opportune time to increase the capital base of the Company totake advantage of opportunities in the market place. Although revaluationsurpluses have enabled the Group to increase its potential portfolio size andmay continue to do so, the Directors wish to create further headroom by raisingup to £40 million before costs to further enhance the Group's capital basetaking the opportunity of giving existing shareholders the opportunity toincrease their holding and at the same time widening the Group's shareholderbase. Based on a capital raise of approximately £38.6 million (net of expenses)this would enable the Group's portfolio to increase by approximately £154million. SUMMARY OF THE PLACING AND OPEN OFFER Under the terms of the Placing and Open Offer, the Company intends to raise upto £38.6 million (net of expenses). Qualifying Shareholders are being given theopportunity to participate in the fundraising by way of the Open Offer. Numishas agreed to use reasonable endeavours to procure subscribers for, or failingwhich to subscribe itself for, New Ordinary Shares not taken up under thePlacing. The Open Offer is not underwritten. Qualifying Shareholders are being offered the opportunity to subscribe at theIssue Price for Open Offer Shares under the Open Offer on the basis of: 1 Open Offer Share for every 13 Existing Ordinary Shares held on the Record Date. Fractional entitlements to Open Offer Shares will notbe allocated but will be aggregated and sold for the benefit of the Company.Valid applications by Qualifying Shareholders may only be made on a personalisedApplication Form. Application Forms are personal to Qualifying Shareholders andmay not be transferred except to satisfy bona fide market claims. Qualifying Shareholders should be aware that the Open Offer is not a rightsissue, and therefore any Open Offer Shares not applied for under the Open Offerwill not be sold in the market for their benefit but may be allocated to thoseQualifying Shareholders electing to subscribe for excess Open Offer Shares.Whilst Qualifying Shareholders may subscribe for their maximum pro-rataentitlement under the Open Offer they can also elect to subscribe for any OpenOffer Shares not taken up under the Open Offer. Further details of the terms and conditions of the Placing and the Open Offerare set out in the Prospectus, expected to be posted later today. The latest time and date for acceptance and payment in full will be 3pm on 10April 2007. Selected Financial Information The Prospectus, expected to be published later today, will include the Company'sconsolidated unaudited financial information for the six month period to 31December 2006. The Group's profit after taxation for the six months ended 31December 2006 was £9.0 million. Adjusted for the UK-REIT conversion charge andrelease of the deferred tax provisions, profits for the period were £30 million.The Group reported an unaudited cash inflow from operating activities of £5.4million. The Group negotiated increases in its loan facilities in February 2007amounting to a total loan facility of £150 million with Royal Bank of Scotlandplc (of which £140 million is a term loan) and a £50 million total term loanfacility from Allied Irish Banks plc. Current Trading and Prospects The start of the new calendar year has seen continued progress being made onthose schemes where the Company has exchanged contracts and pre-let buildingsare being constructed for the Company at Kettering, Poundbury, Hebburn andPenkridge. Work has also now commenced on all of the sites acquired as part ofthe PHIP CHH acquisition. The development of the new pre-let pharmacy next tothe GP practice at Hoddesdon, the extension of the Milton Keynes property andthe developments at Sheerness and Sutton have commenced while the development atHandcross is approaching completion. The Group expects all of these projects tobe completed in the next twelve months. During the period since the turn of the year the Company announced thecompletion of an existing surgery and pharmacy in Wednesdbury for £1.5m.Moreover, the Company's existing pipeline of deals under negotiation remainsstrong. On the rental side the Company continues to progress the rent reviewprogramme. The Directors believe that the Company's UK-REIT status will lead toa larger number of portfolio acquisition opportunities Dividends and Dividend Policy The Board today announced the payment of an interim dividend of 7.5p perOrdinary Share in respect of the six months ended 31 December 2006. The dividendwill be paid on 22 May 2007 to Shareholders who are registered on the Registerof Members on 23 March 2007. The Group will pay a minimum of 90 per cent. of theprofits of its tax exempt business in dividends in line with current dividendpolicy and in accordance with UK-REIT legislation Capital Resources The Group finances its operations through a combination of equity and debtalbeit that the maximum ratio between them is limited by the Group's loanfacilities. Debt funding has grown in line with increases in the Group's capitalbase. The Group currently has available the following facilities; (i) an RBSrevolving advances facility of £10 million; (ii) an RBS long term loan facilityamounting to £140 million; and (iii) an AIB multi-currency revolving loanfacility of £50 million. As at 31 December 2006, the Group's net debt hadincreased from £113 million (financial year ended 30 June 2006) to £153.25million. The net proceeds of the Placing and Open Offer will be used to fund theinvestment activities of the Group. Full details of these facilities and sharecapital can be found in the Prospectus expected to be published later todaytogether with a capital and indebtedness table. The Company is not permittedunder its articles of association or under its bank facilities to allow its loanto value ratio to exceed 75 per cent. Working Capital The Company is of the opinion that, taking into account the available bank andother facilities, and the net proceeds from the Placing and Open Offer, theworking capital available to the Group is sufficient for its presentrequirements, that is for at least 12 months following the date of thisdocument. Significant Change There has been no significant change in the financial or trading position of theGroup since 30 June 2006, which is the date to which the Group's accounts werelast audited. Risk factors The Prospectus expected to be published later today will set out risk factorsrelating to the Group which in summary are: Industry Specific Risks • Availability of suitable property on favourable terms and conditions • Uncertainty over valuations and possible downturns in market • Loss of UK-REIT status Specific Risks relating to the Group • Inability to control primary care initiatives • Retention of the Joint Managers • Loss of UK-REIT status • Interest rate risk Risks relating to the Placing and Open Offer • Fluctuation of share price • Possible issue of additional shares or significant sale of Ordinary Shares could have an adverse effect on the market price of the outstanding Ordinary Shares Additional information Assuming a full take up of Open Offer Entitlements by Qualifying Shareholders,the share capital of the Company will, following the Placing and Open Offer, beincreased 0.38 times (38%) to 33,587,094. Those Shareholders who do notparticipate in the Open Offer will therefore, assuming a full take up of OpenOffer Entitlements by Qualifying Shareholders, suffer a dilution of 38% in theirproportionate ownership and voting interest in the ordinary share capital of theCompany. DEFINITIONS "Application Form" the non-renounceable application form relating to the Open Offer being sent to Qualifying Shareholders with the Prospectus "CREST" the relevant system for the paperless settlement of trades in securities and the holding of uncertificated securities operated by CRESTCo in accordance with the Regulations "Directors" or "Board" the directors of the Company whose names are set out in Part II of the Prospectus "Existing Ordinary Shares" the 24,277,718 ordinary shares in issue at the date of the Prospectus "Extraordinary General the Extraordinary General Meeting of the Company convened for 11 April 2007Meeting" or "Meeting" "Group" the Company and its subsidiaries "New Ordinary Shares" new Ordinary Shares proposed to be issued pursuant to the Placing and the Open Offer "Numis" Numis Securities Limited "Open Offer" the conditional open offer to Qualifying Shareholders to apply to subscribe for New Ordinary Shares at the Issue Price and on the terms and conditions set out in this document and in the Application Form "Open Offer Entitlement" an entitlement to subscribe for New Ordinary Shares, allocated to a Qualifying Shareholder pursuant to the Open Offer "Open Offer Shares" 1,867,516 New Ordinary Shares, which are the subject of the Open Offer "Ordinary Shares" the fully paid ordinary shares of 50 pence (50p) each in the Company "Placing" the conditional placing by Numis on behalf of the Company of the New Ordinary Shares pursuant to the Placing Agreement "Placing Agreement" the conditional agreement dated 15 March 2007 between the Company and Numis described in paragraph 10.1(a) of Part VII of the Prospectus "Placing Shares" the 7,441,860 New Ordinary Shares which are to be allotted pursuant to the Placing "Prospectus" the document detailing, inter alia, the terms of the Placing and Open Offer "Qualifying Shareholders" holders of Ordinary Shares on the register of the Company on the Record Date other than certain Overseas Shareholders as set out in paragraph 2 of Part III of the Prospectus "Record Date" the close of business on 14 March 2007 "REIT" Real Estate Investment Trust "Regulations" or "CREST The Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), asRegulations" amended from time to time "Resolutions" the resolutions set out in the notice of Extraordinary General Meeting on page 76 and 77 of the Prospectus "Shareholders" holders of Ordinary Shares "UK Listing Authority" the Financial Services Authority acting in its capacity as the competent authority to the purposes of Part VI of the Financial Services and Markets Act 2000 "UK-REIT" a Real Estate Investment Trust established in the United Kingdom This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Primary Health