15th Mar 2006 08:00
Healthstar Group plc15 March 2006 Not for release, publication or distribution in or into the United States,Australia, Canada, Japan or any other jurisdiction if to do so would constitutea violation of the relevant laws of such jurisdiction For immediate release 15 March 2006 Recommended Proposal for the acquisition of HEALTHSTAR GROUP PLC by ULTRASIS PLC to be effected by way of a scheme of arrangement under section 425 of the Companies Act 1985 Highlights - The Boards of Ultrasis and Healthstar announce that they have reachedagreement on the terms of a recommended proposal (the "Proposal") wherebyHealthstar will be acquired by Ultrasis - The consideration comprises 28.3 New Ultrasis Shares for eachHealthstar Share which values the entire issued share capital of Healthstar atapproximately £2.9 million - The consideration values each Healthstar Share at 65.1 pence (based onthe Closing Price of one Ultrasis Share of 2.3 pence on 14 March 2006, the lastDealing Day prior to this announcement), a premium of 53.2 per cent. over theClosing Price of one Healthstar Share on that date - The Ultrasis Directors believe that the acquisition of Healthstarrepresents an excellent strategic opportunity - The Proposal will be effected by way of a scheme of arrangement ofHealthstar under section 425 of the Companies Act which has received theunanimous recommendation of the Directors of Healthstar who have givenirrevocable undertakings to vote in favour - The Proposal will enable Healthstar Shareholders to participate in thebenefits expected to arise from Healthstar becoming part of the enlargedUltrasis Group Commenting on the Proposal, Gerald Malone, Chairman of Ultrasis, said: "Today's announcement marks a further step towards Ultrasis' objective ofbuilding a substantial business delivering computer based cognitive behaviouraltherapy and education in both clinical and retail markets. By acquiringHealthstar, Ultrasis will have acquired a business which complements ourproducts, protects our market position, extends market reach and providesopportunities to add value to our existing products and intellectual property." Commenting on the Proposal, Geoffrey Parsons, Chairman of Healthstar, said: "The Proposal represents an opportunity for Healthstar Shareholders to becomeshareholders in an enlarged Ultrasis Group which will be better placed to takeadvantage of the opportunities available to exploit Ultrasis' technology acrossall markets." The formal documentation setting out the details of the Proposal, including theScheme Document setting out the procedures to be followed to approve theProposal and the expected timetable will be posted to Healthstar Shareholders,together with Forms of Proxy, as soon as practicable. Enquiries: Ultrasis plcGerald Malone, Non-executive Chairman 07711 085611Nigel Brabbins, Chief Executive Officer 020 7566 3900 Seymour Pierce Limited (Financial adviser to Ultrasis) 020 7107 8000Stuart LaneJohn Depasquale Healthstar Group plc 020 7490 3788Geoffrey Parsons, Non-executive Chairman Marshall Securities Limited (Financial adviser to Healthstar) 020 7490 3788Robert Luetchford This summary should be read in conjunction with the full text of the attachedannouncement. The Proposal will be subject to the conditions set out in Appendix I to thisannouncement and to the full conditions and further terms which will be set outin the Scheme Document. Appendix II contains the sources and bases of information used in thisannouncement. Appendix III contains the definitions of certain expressions used in thisannouncement. Seymour Pierce Limited, which is authorised and regulated by the FinancialServices Authority, is acting exclusively for Ultrasis and for no-one else inconnection with the Proposal and will not be responsible to anyone other thanUltrasis for providing the protections afforded to customers of Seymour PierceLimited, nor for providing advice in relation to the Proposal or any mattersreferred to herein. Marshall Securities Limited, which is authorised and regulated by the FinancialServices Authority, is acting exclusively for Healthstar and for no-one else inconnection with the Proposal and will not be responsible to anyone other thanHealthstar for providing the protections afforded to customers of MarshallSecurities Limited, nor for providing advice in relation to the contents of theProposal or any matters referred to herein. This announcement is not an offer to sell or an invitation to purchase anysecurities or the solicitation of any vote or approval in any jurisdiction.Healthstar Shareholders are advised to read carefully the formal documentationin relation to the Proposal once it has been despatched to Shareholders. The availability of the Proposal to persons not resident in the UK may beaffected by the laws of the relevant jurisdiction. Any persons who are subjectto the laws of any jurisdiction other than the UK should inform themselves aboutand observe any applicable requirements. Dealing disclosure requirements: Under the provisions of Rule 8.3 of the City Code on Takeovers and Mergers (the"Code"), if any person is, or becomes, "interested" (directly or indirectly) in1% or more of any class of "relevant securities" of Ultrasis plc or HealthstarGroup plc, all "dealings" in any "relevant securities" of that company(including by means of an option in respect of, or a derivative referenced to,any such "relevant securities") must be publicly disclosed by no later than 3.30pm (London time) on the London business day following the date of the relevanttransaction. This requirement will continue until the date on which the Schemebecomes effective or on which the "offer period" otherwise ends. If two or morepersons act together pursuant to an agreement or understanding, whether formalor informal, to acquire an "interest" in "relevant securities" of Ultrasis plcor Healthstar Group plc, they will be deemed to be a single person for thepurpose of Rule 8.3. Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevantsecurities" of Ultrasis plc or of Healthstar Group plc by Ultrasis plc or byHealthstar Group plc or by any of their respective "associates", must bedisclosed by no later than 12.00 noon (London time) on the London business dayfollowing the date of the relevant transaction. A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Takeover Panel's website at www.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the ownership or control of securities, or by virtue of any option inrespect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on thePanel's website. If you are in any doubt as to whether or not you are requiredto disclose a "dealing" under Rule 8, you should consult the Panel's website atwww.thetakeoverpanel.org.uk or contact the Panel on telephone number +44 20 76380129; fax +44 20 7236 7013. Not for release, publication or distribution in or into the United States,Australia, Canada, Japan or any other jurisdiction if to do so would constitutea violation of the relevant laws of such jurisdiction. For immediate release 15 March 2006 Recommended Proposal for the acquisition of HEALTHSTAR GROUP PLC by ULTRASIS PLC to be effected by way of a scheme of arrangement under section 425 of the Companies Act 1985 1. Introduction The Boards of Ultrasis and Healthstar announce that terms have been agreed forthe acquisition of Healthstar by Ultrasis to be effected by way of a scheme ofarrangement. The Proposal, which is conditional, inter alia, on approval of theShareholders of Healthstar, is unanimously recommended by the Healthstar Board. 2. Summary terms of the Proposal The Proposal is to be effected by way of a scheme of arrangement of Healthstarunder section 425 of the Companies Act. The purpose of the Scheme is to enableUltrasis to acquire the whole of the issued and to be issued share capital ofHealthstar. Upon the Scheme becoming effective the existing shares in Healthstarwill be cancelled and Shareholders will receive: for each Healthstar Share 28.3 New Ultrasis Shares The Proposal values the entire issued share capital of Healthstar atapproximately £2.9 million and each Healthstar Share at 65.1 pence based on theClosing Price of one Ultrasis Share of 2.3 pence on 14 March 2006, the lastDealing Day prior to this announcement, representing a premium of 53.2 per cent.over the Closing Price of a Healthstar Share of 42.5 pence on that day. Completion of the Proposal, assuming the exercise of all options outstandingunder the Healthstar Share Option Scheme, will result in the issue of140,651,000 New Ultrasis Shares by Ultrasis representing 9.6 per cent. of theenlarged share capital of Ultrasis. Fractions of New Ultrasis Shares will not be allotted or issued to HealthstarShareholders pursuant to the Proposal. Details of the conditions relating to implementation of the Scheme are set outin Appendix I to this announcement. 3. Background to and reasons for the Proposal The Ultrasis Directors believe that there are clear opportunities forexploitation of the technology which Ultrasis has developed since the early1990s in professional, corporate and consumer markets. In November 2003 Ultrasis granted exclusive rights to exploit its technology inEnglish language consumer markets to a consortium which subsequently becameMindtech (now a wholly owned subsidiary of Healthstar). Since that time therehas been increasing evidence of convergence of markets, fuelled in particular bythe increasing use of web-based products and systems. Ultrasis is a provider ofweb-based user-friendly health and well-being products irrespective of whetherthe purchaser is a professional medical provider or corporation. Ultrasis isalso moving rapidly towards being a provider of such web-based products toindividuals. The Ultrasis Directors believe that the acquisition of Healthstar will enableUltrasis to pursue all markets for its technology, potentially worldwide. TheHealthstar Group product development programme is relevant not just to theconsumer markets targeted by Healthstar Group but also to Ultrasis' corporatemarketing initiatives. The integration of the businesses will enable theEnlarged Group to develop a single strategy eliminating inefficiencies andpotential conflicts in the market place. The granting of the exclusive consumer market licence referred to above and asmall associated placing strengthened Ultrasis' balance sheet at a time whenconditions for capital raising were unfavourable. It also provided Ultrasis withworking capital resources to enable it to undertake the development andmarketing work which is now beginning to come to fruition. Since then Ultrasis and Healthstar have pursued different market sectors buthave always been aware of the commonality of interests and opportunities arisingfrom the shared technology pedigree. The Board of Healthstar has followed astrategy which is complementary to Ultrasis' developments. Accordingly, theUltrasis Directors consider that the Proposal represents a key strategic movewhich will re-integrate the Ultrasis intellectual property and provide a unifiedand coherent platform for the Enlarged Group's development, marketing, licensingand sales efforts in the coming years. Healthstar will be acquired by Ultrasis with the benefit of the cash and othernet assets of Healthstar Group. The unaudited cash balances of Healthstar Groupas at 28 February 2006 were in excess of £330,000. These cash balances will bereduced, inter alia, by the normal overheads of Healthstar Group in the periodup to the Effective Date and by the costs incurred and to be incurred byHealthstar in connection with the Proposal but will be increased by anysubscription proceeds arising on exercise of options under the Healthstar ShareOption Scheme. It is expected that such options will be exercised in respect of470,000 new ordinary shares in Healthstar Group plc at 50 pence per share,providing subscription proceeds of £235,000. 4. Benefits of the Proposal for Healthstar Shareholders The origins of Healthstar Group can be traced to a spin-out from Ultrasis ofrights to exploit Ultrasis' technology in English speaking consumer markets at atime when distinct marketing opportunities were perceived in the worldwideconsumer market as opposed to professional medical and corporate markets.Healthstar has gained considerable experience of the opportunities and thechallenges of addressing consumer markets. In particular, it has become apparentthat, owing to the convergence of technologies, success in addressing consumermarkets would be likely to create corresponding opportunities in professionalmedical and corporate markets. However, Healthstar would be unable to addressthose wider markets (owing to the scope of the licensed rights) which woulddetract from the cost-effectiveness and success prospects of Healthstar'spotential development programmes with third party licensees. The Board ofHealthstar has therefore concluded that the prospects for its shareholders ofbenefiting from the commercial rewards of successful exploitation of theUltrasis technology would be enhanced as part of a larger and stronger groupwith an integrated and unrestricted intellectual property base. The Board of Healthstar has concluded that the Proposal represents a fairassessment and proper sharing of the synergistic benefits which could resultfrom the Healthstar business becoming part of the Enlarged Group. 5. Recommendation The Healthstar Directors, who have been so advised by Marshall SecuritiesLimited, consider the Proposal to be fair and reasonable. In providing advice tothe Healthstar Directors, Marshall Securities Limited has taken into account thecommercial assessments of the Healthstar Directors. Accordingly, the Healthstar Directors unanimously recommend that HealthstarShareholders vote in favour of the resolutions to be proposed at the CourtMeeting and the EGM as the Healthstar Directors and certain persons connectedwith them (within the meaning of section 346 of the Act) who beneficially ownHealthstar Shares have irrevocably undertaken to do so in respect of, inaggregate, 60,000 Healthstar Shares, in which they are interested, representingapproximately 1.3 per cent. of the existing issued share capital of Healthstar. 6. Information on Ultrasis Ultrasis is a leader in the development of a new generation of interactivesolutions which help people to manage their well-being and mental health.Ultrasis has created and markets innovative computerised solutions based on theintegration of advanced multimedia software and expert knowledge in health andpsychology which help people tackle stress and a broad spectrum of chronicconditions. Ultrasis has significant expertise in the development of computerised productswhich utilise biofeedback, cognitive behavioural therapy (CBT), and multimedia.Ultrasis is the only company in the United Kingdom to have offered products withthis range of technologies and features. 'IBS Relief' was the first product in the UK to combine biofeedback, andmultimedia to help people manage the symptoms of irritable bowel syndrome. In the US and the UK, over two and a half million individuals can potentiallyaccess Ultrasis' web-based products that help people manage their emotionalhealth (stress, insomnia, depression and anxiety), and reduce drug and alcoholabuse. These products are provided principally by a major healthcare provider inthe USA and by the National Health Service in the UK. Ultrasis' anxiety and depression product "Beating the Blues" ("BtB") wasrecently recommended by the National Institute of Health and Clinical Excellence("NICE") as a first line treatment option for people with mild and moderatedepression. BtB has been through extensive clinical trials and is available inmany GP surgeries throughout the UK. The programme was developed by Ultrasis incollaboration with Dr Judy Proudfoot and colleagues at the Institute ofPsychology. 7. Information on Healthstar Healthstar was established with the objective of building a substantial andprofitable business developing, marketing and selling life improvement productsand services. These are broadly defined as products and services which seek toimprove a person's quality of life. The focus of activity since the flotation ofHealthstar in December 2004 has been the validation and completion of twopotential consumer products based on Ultrasis technology, namely an alcoholadvice product to be delivered by telephone and a sensor-based interactiveproduct aimed, initially, at the US consumer market. In March 2005 Healthstar started the test marketing of a telecoms product in theUK. The decision to test market an alcohol advice product as the first telecomsproduct account was influenced by the work which had already been completed inthe area of substance and alcohol abuse by Ultrasis. This provided a significantadvantage in terms of development lead time for a consumer product. The testmarketing involved a small number of unbranded newspaper advertisements andgenerated only a small volume of responses. This led the Board of Healthstar toconclude that further test marketing of telecoms products should be deferreduntil Healthstar was in a position to market a suite of products within abranded offering. Healthstar has developed a sensor-based interactive product which enables usersto address a range of stress related symptoms. The product, which is adevelopment of Ultrasis technology, utilises a proprietary sensor attached tothe user's fingers by a simple clip. The sensor measures stress levels throughminute changes in the user's sweat glands and displays the results by means ofproprietary software running on a personal computer. An infomercial to evaluate the potential of directly marketing the product toconsumers under the name "Tension Taker" in the United States was producedduring the summer of 2005. It gained endorsements from a number of typicalpotential users and was aired at the end of September and during the first weeksof October 2005. The test marketing was confined to a limited cross section ofgeographical areas and time-slots. The responses generated fell far short of thelevels which would justify purchase of further media time. The results suggestedthat the lack of strong branding and market position made it difficult topromote a relatively sophisticated product through the medium of an infomercial. The results of the two test marketing programmes during 2005 were disappointingbut informative. The Board of Healthstar concluded that directly addressing theconsumer market would be difficult for a company such as Healthstar with limitedresources and lack of a recognised brand name. However, the Tension Takerproduct has enabled Healthstar to showcase the technology to a number of thirdparties, including large technology companies and companies withwell-established brand names, who are currently evaluating the potential forlicensing the technology for their own purposes. Furthermore, a number oforganisations have expressed interest in incorporating the Tension Taker productinto their employee well-being programmes, aimed at reducing stress in theworkplace and absenteeism. Such discussions have led the Board of Healthstar toconclude that the line between the consumer market and the corporate market isbecoming increasingly blurred and that this convergence will accelerate onceweb-based versions of self-help products become more established. In the period ended 30 June 2005 Healthstar reported a loss before tax of£384,539 and its net assets at that date were £1,720,823. 8. Current trading of Ultrasis As reported on 17 February 2006 in the interim results of Ultrasis for the sixmonths ended 31 January 2006, the business of Ultrasis has been developingconsistently with significant new sales and renewals of both the Relief Seriesand Beating the Blues. The Ultrasis Directors believe that the Proposal will better position Ultrasisto benefit from the growing Personal Well Being marketplace and enable itfurther to develop its existing business. The Ultrasis Board is confident in thefinancial and trading prospects of the Enlarged Group. 9. Management and employees The Ultrasis Directors have confirmed that the existing employment rights,including pension rights, of all employees and associates of Healthstar will befully safeguarded. The combined business will be managed by the existing management team ofUltrasis. It is intended that arrangements will be put in place to ensure anorderly handover of responsibilities and continued access to the knowledge andexpertise which has been built up by the Healthstar team. 10. Disclosure of interests in Healthstar Neither Ultrasis nor, so far as Ultrasis is aware, any person deemed to beacting in concert with Ultrasis, owns or controls any Healthstar Shares or hasany options to acquire Healthstar Shares. Neither Ultrasis nor, so far asUltrasis is aware, any person acting in concert with Ultrasis for the purposesof the Proposal has any arrangement in relation to Healthstar Shares or anysecurities convertible into or exchangeable into Healthstar Shares or options(including traded options) in respect of, or derivatives referenced to, any suchshares. For these purposes, "arrangement" includes any indemnity or optionarrangement, any agreement or understanding, formal or informal, of whatevernature, relating to Healthstar Shares which may be an inducement to deal orrefrain from dealing in such shares. In the interests of confidentiality priorto this announcement, Ultrasis has not made any enquiries in this respect ofcertain parties who may be presumed by the Panel to be acting in concert withUltrasis for the purposes of the Proposal. 11. Court Meeting The Scheme requires approval by the requisite majority of HealthstarShareholders at the Court Meeting and the subsequent sanction of the Court. At the Court Meeting, voting will be on a poll whereby Healthstar Shareholders,voting in person or by proxy, will be entitled to one vote for each HealthstarShare held. The resolution to be proposed at that Court Meeting will be passedif a majority in number of the Healthstar Shareholders, present and votingeither in person or by proxy, representing at least 75 per cent. in nominalvalue of the Healthstar Shares voted, vote in favour of the Scheme. Upon the Scheme becoming effective, it will be binding on all holders ofHealthstar Shares, irrespective of whether they attended or voted at the CourtMeeting. 12. Conditions of the Scheme The Proposal is conditional upon the Scheme becoming effective. Implementationof the Scheme is subject to, and conditional upon, inter alia: (i) approval of the Scheme by a majority in number of the HealthstarShareholders, present and voting either in person or by proxy, representing atleast 75 per cent. in value of the Healthstar Shares voted at the Court Meetingor at any adjournment thereof; (ii) the special resolution required to approve and implement theScheme being passed at the EGM of Healthstar; (iii) permission being granted for the New Ultrasis Shares to beadmitted to trading on AIM and such permission not being withdrawn; and (iv) the Scheme being sanctioned by the Court, with or withoutmodification as provided for in the Scheme, and an office copy of the order ofthe Court being delivered for registration to the Registrar of Companies inEngland and Wales not later than 31 August 2006, or such later date asHealthstar and Ultrasis may agree and the Court may allow. Further details of the terms and conditions of the Scheme are set out inAppendix I of this announcement. If the Scheme does not become effective on or before 31 August 2006, or suchlater date as Healthstar and Ultrasis may agree and the Court may approve, itwill lapse, and the Scheme will not proceed. 13. Further details of the Proposal The Proposal will be subject to the conditions of the implementation of theScheme set out in Appendix I, and the conditions and further terms which will beset out in the Scheme Document. 14. Admission of New Ultrasis Shares to trading on AIM and dealings Application will be made to the London Stock Exchange for the New UltrasisShares to be admitted to trading on AIM. It is expected that Admission willbecome effective and that dealings on AIM (for normal settlement) will commenceas soon as reasonably practicable after the Effective Date. No application is being made for the New Ultrasis Shares to be admitted tolisting or to be dealt in on any other exchange. The New Ultrasis Shares to be issued pursuant to the Proposal will be issuedcredited as fully paid and free from all liens, charges, equitable interests,encumbrances and any other third party rights of any nature whatsoever. The NewUltrasis Shares will rank pari passu in all respects with, and have the samerights as, the Existing Ultrasis Shares, including the right to receive andretain all future dividends and other distributions declared, made or paid byUltrasis following the date of this announcement. Fractions of New UltrasisShares will not be allotted or issued to Healthstar Shareholders pursuant to theProposal. Pending the issue of definitive certificates for the New Ultrasis Shares,transfers will be certified against the register held by Capita IRG Registrars.Temporary documents of title will not be issued. 15. Cancellation of trading in Healthstar Shares on AIM It is intended that, upon the Proposal becoming effective and subject to anyapplicable requirements of the London Stock Exchange, Ultrasis will procure thatHealthstar applies to the London Stock Exchange for the trading of theHealthstar Shares on AIM to be cancelled. 16. Ultrasis issued share capital In accordance with Rule 2.10 of the City Code, Ultrasis confirms that it has1,331,813,667 ordinary shares in issue. The International SecuritiesIdentification Number for Ultrasis ordinary shares is GB0001494979. 17. Healthstar issued share capital In accordance with Rule 2.10 of the City Code, Healthstar confirms that it has4,500,000 ordinary shares in issue. The International Securities IdentificationNumber for Healthstar ordinary shares is GB00B0394569. 18. General The availability of the Proposal to persons not resident in the UK may beaffected by the laws of the relevant jurisdiction. Any persons who are subjectto the laws of any jurisdiction other than the UK should inform themselves aboutand observe any applicable requirements. The formal documentation setting out the details of the Proposal, including theScheme Document setting out the procedures to be followed to approve theProposal and the expected timetable and the Forms of Proxy will be posted toHealthstar Shareholders as soon as practicable. If the Scheme becomes effective, it will be binding on all HealthstarShareholders irrespective of whether or not they attend or vote in favour of theScheme at the Court Meeting or in favour of the special resolution to beproposed at the EGM. 19. Responsibility (i) The Healthstar Directors accept responsibility for theinformation contained in this announcement other than that relating to theUltrasis Group, the Ultrasis Directors and their immediate families. To the bestof the knowledge and belief of the Healthstar Directors (who have taken allreasonable care to ensure that such is the case), the information in thisannouncement for which they take responsibility is in accordance with the factsand does not omit anything likely to affect the import of such information. (ii) The Ultrasis Directors accept responsibility for the informationcontained in this announcement relating to the Ultrasis Group, the UltrasisDirectors and their immediate families. To the best of the knowledge and beliefof the Ultrasis Directors (who have taken all reasonable care to ensure thatsuch is the case), the information in this announcement for which they takeresponsibility is in accordance with the facts and does not omit anything likelyto affect the import of such information. 20. Appendices The Proposal will be subject to the conditions of the implementation of theScheme set out in Appendix I, and the conditions and further terms that will beset out in the Scheme Document. Appendix II to this announcement contains further details of the bases andsources of the financial and other information set out in this announcement. Appendix III to this announcement contains definitions of certain expressionsused in this announcement. Enquiries: Ultrasis plcGerald Malone, Non-executive Chairman 07711 085611Nigel Brabbins, Chief Executive Officer 020 7566 3900 Seymour Pierce Limited (Financial adviser to Ultrasis) 020 7107 8000Stuart LaneJohn Depasquale Healthstar Group plc 020 7490 3788Geoffrey Parsons, Non-executive Chairman Marshall Securities Limited (Financial adviser to Healthstar) 020 7490 3788Robert Luetchford This announcement is not an offer to sell or an invitation to purchase anysecurities or the solicitation of any vote or approval in any jurisdiction.Healthstar Shareholders are advised to read carefully the formal documentationin relation to the Proposal once it has been despatched to Shareholders. This announcement has been prepared for the purpose of complying with Englishlaw and the City Code and the information disclosed may not be the same as thatwhich would have been disclosed if this announcement had been prepared inaccordance with the laws of jurisdictions outside England. The New Ultrasis Shares to be issued in connection with the Proposal have notbeen and will not be registered under the US Securities Act or under thesecurities laws of any state of the United States; the relevant clearances havenot been and will not be obtained from the securities commission or any similarauthority of any province or territory of Canada; no prospectus has been, orwill be, lodged with, or registered by, the Australian Securities andInvestments Commission or the Japanese Ministry of Finance; and the New UltrasisShares have not been, nor will they be, registered under or offered incompliance with applicable securities laws of any state, province, territory orjurisdiction of Canada, Australia or Japan. Accordingly, the New Ultrasis Sharesare not being and will not be offered, sold, resold or delivered, directly orindirectly, in or into the United States, Canada, Australia or Japan or anyother jurisdiction if to do so would constitute a violation of the laws of, orrequire registration thereof in, the relevant jurisdiction or (unless otherwisedetermined by Ultrasis and permitted by applicable law and regulation) to, orfor the account or benefit of, any US, Canadian, Australian or Japanese person. Seymour Pierce Limited, which is authorised and regulated by the FinancialServices Authority, is acting exclusively for Ultrasis and for no-one else inconnection with the Proposal and will not be responsible to anyone other thanUltrasis for providing the protections afforded to customers of Seymour PierceLimited, nor for providing advice in relation to the Proposal or any mattersreferred to herein. Marshall Securities Limited, which is authorised and regulated by the FinancialServices Authority, is acting exclusively for Healthstar and for no-one else inconnection with the Proposal and will not be responsible to anyone other thanHealthstar for providing the protections afforded to customers of MarshallSecurities Limited, nor for providing advice in relation to the contents of theProposal or any matters referred to herein. If you are in any doubt about the action you should take, you are recommended toseek your own personal financial advice immediately from your stockbroker, bankmanager, solicitor, accountant or independent financial adviser authorised underthe Financial Services and Market Act 2000 if you are resident in the UnitedKingdom or, if not, from another appropriately authorised independent financialadviser. APPENDIX I CONDITIONS TO IMPLEMENTATION OF THE SCHEME The Proposal will be conditional upon the Scheme becoming unconditional andbecoming effective by not later than 31 August 2006 or such later date (if any)as Healthstar and Ultrasis may agree and the Court may allow. 1. The Scheme is conditional upon: (a) the approval by a majority in number representing three-fourths invalue of the holders of Healthstar Shares present and voting, either in personor by proxy, at the Court Meeting; (b) the special resolution required to approve and implement theScheme being passed at the EGM of Healthstar; (c) the Court Sanction being obtained and an office copy of the Orderbeing delivered for registration to the Registrar of Companies and registrationof the Order involved in the Scheme with the Registrar of Companies; and (d) permission being granted for the admission of the New UltrasisShares to trading on AIM becoming effective in accordance with the AIM Rules or(if Ultrasis so determines and subject to the consent of the Panel) the LondonStock Exchange agreeing to admit such shares to trading on AIM subject only tothe allotment of such shares. 2. Healthstar and Ultrasis have agreed that, subject as statedin paragraph 3 below, the Court Sanction will only be sought if: (a) Authorisations (i) all authorisations in any jurisdiction necessary for or inrespect of the Proposal, its implementation or any acquisition of any shares in,or control of, Healthstar or any other member of the Wider Healthstar Group byany member of the Wider Ultrasis Group having been obtained in terms and in aform satisfactory to Ultrasis acting reasonably from any relevant person or fromany person or body with whom any member of the Wider Healthstar Group hasentered into contractual arrangements and all such authorisations remaining infull force and effect and there being no intimation of any intention to revokeor not renew the same; and (ii) all authorisations necessary to carry on the business of anymember of the Wider Healthstar Group remaining in full force and effect andthere being no notification of any intention to revoke or not to renew the same;and (iii) all necessary filings having been made and all applicable waitingand other periods having expired, lapsed or been terminated and all applicablestatutory or regulatory obligations in any jurisdiction in respect of theProposal having been complied with. (b) Regulatory Intervention No relevant person having taken, instituted, implemented or threatened any legalproceedings, or having required any action to be taken or otherwise having doneanything or having enacted, made or proposed any statute, regulation, order ordecision or taken any other step and there not continuing to be outstanding anystatute, regulation, order or decision that would or might reasonably beexpected to (in each case to an extent which is material and adverse in thecontext of the Wider Healthstar Group): (i) make the Proposal, its implementation or the acquisition orproposed acquisition of any shares in, or control or management of, the WiderHealthstar Group by Ultrasis illegal, void or unenforceable; or (ii) otherwise directly or indirectly prevent, prohibit or otherwiserestrict, restrain, delay or interfere with the implementation of, or imposeadditional conditions or obligations with respect to or otherwise challenge orrequire amendment of, the Proposal or the proposed acquisition of Healthstar byUltrasis or any acquisition of shares in Healthstar by Ultrasis; or (iii) require, prevent or delay the divestiture by Ultrasis of anyshares or other securities in Healthstar; or (iv) impose any limitation on the ability of any member of the WiderUltrasis Group or any member of the Wider Healthstar Group to acquire or hold orexercise effectively, directly or indirectly, any rights of ownership of sharesor other securities or the equivalent in any member of the Wider HealthstarGroup or management control over any member of the Wider Healthstar Group; or (v) require, prevent or delay the disposal by Ultrasis or any member ofthe Wider Ultrasis Group, or require the disposal or alter the terms of anyproposed disposal by any member of the Wider Healthstar Group, of all or anypart of their respective businesses, assets or properties or impose anylimitation on the ability of any of them to conduct their respective businessesor own their respective assets or properties; or (vi) (save as required pursuant to the Proposal) require any member ofthe Wider Ultrasis Group or of the Wider Healthstar Group to offer to acquireany shares or other securities (or the equivalent) in any member of the WiderHealthstar Group owned by any third party (in each case, other than inimplementation of the Proposal); or (vii) impose any limitation on the ability of any member of the WiderUltrasis Group or the Wider Healthstar Group to integrate or co-ordinate itsbusiness, or any part of it, with the businesses or any part of the businessesof any other member of the Wider Ultrasis Group and/or the Wider HealthstarGroup; or (viii) result in any member of the Wider Ultrasis Group or the WiderHealthstar Group ceasing to be able to carry on business under any name underwhich it presently does so; or (ix) otherwise materially and adversely affect any or all of thebusinesses, assets or financial condition of any member of the Wider UltrasisGroup or the Wider Healthstar Group; and all applicable waiting and other time periods during which any such relevantperson could institute, or implement or threaten any legal proceedings, havingexpired, lapsed or been terminated. (c) Consequences Of The Proposal Save as Disclosed, there being no provision of any agreement to which any memberof the Wider Healthstar Group is a party, or by or to which any such member, orany part of its assets, may be bound, entitled or subject, which would as aconsequence of the Proposal or of the acquisition or proposed acquisition of allor any part of the issued share capital of, or change of control or managementof, Healthstar or any other member of the Healthstar Group result in (in eachcase to an extent which is material and adverse in the context of the WiderHealthstar Group): (i) any material assets or interests of any member of the WiderHealthstar Group being or falling to be disposed of or charged in any way orceasing to be available to any member of the Wider Healthstar Group or anyrights arising under which any such asset or interest could be required to bedisposed of or charged in any way or could cease to be available to any memberof the Wider Healthstar Group; or (ii) any moneys borrowed by, or other indebtedness (actual orcontingent) of, or any grant available to, any member of the Wider HealthstarGroup being or becoming repayable or capable of being declared repayableimmediately or earlier than the repayment date stated in such agreement or theability of such member of the Wider Healthstar Group to incur any such borrowingor indebtedness becoming or being capable of becoming withdrawn, inhibited orprohibited; or (iii) any such agreement or the rights, liabilities, obligations orinterests of any such member under it being terminated or materially andadversely modified or affected or any onerous obligation arising or any materialadverse action being taken under it; or (iv) the interests or business of any such member in or with any thirdparty (or any arrangements relating to any such interests or business) beingterminated or adversely modified or affected; or (v) the financial or trading position or prospects or value of anymember of the Wider Healthstar Group being materially prejudiced or materiallyadversely affected; or (vi) the creation of any mortgage, charge or other security interestover the whole or any part of the business, property or assets of any member ofthe Wider Healthstar Group or any such security (whenever arising or havingarisen) becoming enforceable or being enforced; or (vii) any member of the Wider Healthstar Group ceasing to be able to carryon business under any name under which or on the terms on which it currentlydoes so or any person presently not able to carry on business under any nameunder which any member of the Wider Healthstar Group currently carries onbusiness becoming able to do so; or (viii) the creation of actual or contingent liabilities by any member ofthe Wider Healthstar Group; or (ix) the ability of any member of the Ultrasis Group to carry on itsbusiness being materially and adversely affected, and no event having occurred which, under any provision of any such agreement towhich any member of the Wider Healthstar Group is a party, or by or to which anysuch member, or any of its assets, may be bound, entitled or subject, couldresult in any of the events or circumstances as are referred to insub-paragraphs (i) to (ix) inclusive. (d) No Corporate Action Taken Since The Accounting Date Since the Accounting Date, save as otherwise Disclosed or pursuant totransactions in favour of Healthstar or a wholly-owned subsidiary of Healthstar,no member of the Wider Healthstar Group having (in each case to an extent whichis material and adverse in the context of the Wider Healthstar Group): (i) issued or agreed to issue or authorised or proposed the issue orgrant of additional shares of any class or securities convertible into orexchangeable for, or rights, warrants or options to subscribe for or acquire,any such shares or convertible securities (save pursuant to the Healthstar ShareOption Scheme or the issue of Healthstar Shares on the exercise of HealthstarOptions); or (ii) redeemed, purchased, repaid or reduced or announced theredemption, purchase, repayment or reduction of any part of its share capital ormade or announced the making of any other change to its share capital; or (iii) recommended, declared, paid or made or proposed to recommend,declare, pay or make any dividend, bonus issue or other distribution whetherpayable in cash or otherwise other than dividends lawfully paid to Healthstar orwholly owned subsidiaries of Healthstar; or (iv) (save for transactions between two or more wholly owned members ofthe Healthstar Group) merged or demerged with or from, or acquired, any bodycorporate or authorised or proposed or announced any intention to propose anysuch merger or demerger; or (v) other than in the ordinary course of business acquired or disposedof, transferred, mortgaged or charged, or created or granted any securityinterest over, any material assets (including shares and trade investments) orauthorised or proposed or announced any intention to propose any acquisition,disposal, transfer, mortgage, charge or creation or grant of any securityinterest; or (vi) (save for transactions between two or more wholly owned members ofthe Healthstar Group) issued or authorised or proposed the issue of anydebentures or incurred or increased any borrowings, indebtedness or liability(actual or contingent); or (vii) entered into or varied, or authorised or proposed the entry into orvariation of, or announced its intention to enter into or vary, any transaction,arrangement, contract or commitment (whether in respect of capital expenditureor otherwise) which is material and of a long term, onerous or unusual nature ormagnitude or which is restrictive to the existing business of any member of theWider Healthstar Group or which is not in the ordinary course of business; or (viii) entered into, implemented, effected, authorised or proposed orannounced its intention to enter into, implement, effect, authorise or proposeany material contract, reconstruction, amalgamation, scheme, commitment or othertransaction or arrangement otherwise than in the ordinary course of business; or (ix) waived or compromised any material claim (other than in theordinary course of business), or (x) entered into or varied or made any offer (which remains open foracceptance) to enter into or vary the terms of any material contract with any ofthe directors or senior executives of Healthstar or any of the directors orsenior executives of any other member of the Wider Healthstar Group; or (xi) taken or proposed any corporate action or had any legal proceedingsinstituted or threatened against it or petition presented for its winding-up(voluntary or otherwise), dissolution or reorganisation or for the appointmentof a receiver, administrator, administrative receiver, trustee or similarofficer of all or any of its assets and revenues or for any analogousproceedings or steps in any jurisdiction or for the appointment of any analogousperson in any jurisdiction; or (xii) been unable, or admitted in writing that it is unable, to pay itsdebts or has stopped or suspended (or threatened to stop or suspend) payment ofits debts generally or ceased or threatened to cease carrying on all or asubstantial part of its business; or (xiii) made any material alteration to its memorandum or articles ofassociation, or other incorporation documents; or (xiv) entered into any agreement or passed any resolution or made any offer(which remains open for acceptance) or proposed or announced any intention withrespect to any of the transactions, matters or events referred to in thiscondition 2(d). (e) Other Events Since the Accounting Date In the period since the Accounting Date, save as Disclosed: (i) no litigation or arbitration proceedings, prosecution,investigation or other legal proceedings having been announced, instituted,threatened or remaining outstanding by, against or in respect of, any member ofthe Wider Healthstar Group or to which any member of the Wider Healthstar Groupis or may become a party (whether as claimant, defendant or otherwise) which inany case, would be likely to have a material adverse effect on the financialposition of the Wider Healthstar Group; and (ii) no material adverse change or deterioration having occurred inthe business or assets or financial or trading position, assets or profits ofany member of the Wider Healthstar Group; and (iii) no enquiry or investigation by, or complaint or reference to, anyrelevant person against or in respect of any member of the Wider HealthstarGroup having been threatened, announced, implemented or instituted or remainingoutstanding by, against or in respect of, any member of the Wider HealthstarGroup which in any case, would be likely to have a material adverse effect onthe financial position of the Wider Healthstar Group; and (iv) no contingent or other liability having arisen or become apparentor increased which in any case, would be likely to have a material adverseeffect on the financial position of the Wider Healthstar Group. (f) Other Issues Save as Disclosed, Ultrasis not having discovered that (in each case to anextent which is material and adverse in the context of the Wider HealthstarGroup): (i) the financial, business or other information disclosed at anytime by any member of the Wider Healthstar Group, whether publicly or in thecontext of the Proposal either contained a material misrepresentation of fact oromitted to state a fact necessary to make the information disclosed notmisleading in any material respect; or (ii) any contingent liability disclosed in such disclosed informationwould or might materially and adversely affect, directly or indirectly, thebusiness or profits of the Wider Healthstar Group taken as a whole; or (iii) any information disclosed at any time by or on behalf of anymember of the Wider Healthstar Group is or becomes incorrect in any materialrespect. 3. Ultrasis reserves the right to waive all or any of theconditions contained in paragraphs 2(a) to 2(f) above inclusive, in whole or inpart. If Ultrasis is required by the Panel to make an offer for HealthstarShares under the provisions of Rule 9 of the City Code, Ultrasis may make suchalterations to the conditions as may be necessary to comply with the provisionsof that Rule. 4. The Proposal will be governed by English law. The rules ofthe City Code and the Court will, so far as they are appropriate, apply to theProposal. 5. Save with the consent of the Panel, the Scheme will notproceed if, before the Effective Date, implementation of the Proposal isreferred to the Competition Commission. APPENDIX II Sources and Bases In this Announcement: (i) unless otherwise stated in this announcement, financialinformation relating to Healthstar has been extracted from the report andaccounts of Healthstar for the period ended 30 June 2005; (ii) unless otherwise stated in this announcement, financialinformation relating to Ultrasis has been extracted from the interim results ofUltrasis for the period ended 31 January 2006; (iii) the calculation of the value of the issued share capital ofHealthstar is based upon 4,500,000 Healthstar Shares in issue on 14 March 2006(according to the records of Healthstar); (iv) the market capitalisation of Ultrasis is based on a total of1,331,813,667 Ultrasis Shares in issue on 14 March 2006, (according to therecords of Ultrasis) and the Closing Price of one Ultrasis Shares on 14 March2006 of 2.3 pence; and (v) the calculation of the number of New Ultrasis Shares to be issuedin respect the Proposal is based upon the number of Healthstar Shares in issue(as described in (iii) above) and the assumed issue of 470,000 Healthstar Sharesto satisfy options exercisable at a price of 50 pence per Healthstar Share. APPENDIX III Definitions The following definitions apply throughout this announcement, unless the contextrequires otherwise: "Accounting 30 June 2005;Date""Act" or the Companies Act 1985 (as amended);"Companies Act""Admission" admission of the New Ultrasis Shares to AIM becoming effective in accordance with the AIM Rules;"agreements" arrangements, agreements, commitments, licences, permits, franchises, partnerships, joint ventures, authorisations or other instrument;"AIM" AIM, a market operated by the London Stock Exchange;"AIM Rules" rules published by the London Stock Exchange governing, inter alia, admission to AIM and the continuing obligations of companies admitted to AIM, as amended from time to time;"Annual Report" report and accounts of Healthstar for the period ended 30 June 2005;"authorisations" authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals;"Board" the board of Ultrasis or the board of Healthstar as the context requires;"Closing Price" the closing middle market quotation on 14 March 2006 of one Healthstar Share and of one Ultrasis Share have been derived from the website of the London Stock Exchange;"Code" or "City the City Code on Takeovers and Mergers as from time to timeCode" interpreted by the Panel;"Court" the High Court of Justice in England and Wales;"Court Meeting" the meeting of Healthstar Shareholders to be convened by order of the Court pursuant to section 425 of the Companies Act to consider and, if thought fit, approve the Scheme, including any adjournment thereof;"Court Sanction" the sanction (with or without modification) of the Scheme and confirmation of the reduction of capital of Healthstar in accordance with the terms of the Scheme by the Court;"Daily Official the Daily Official List of the London Stock Exchange;List""Dealing Day" a day on which the London Stock Exchange is open for business in the trading of securities admitted to AIM;"Disclosed" (i) as disclosed in the Annual Report (ii) as publicly announced by Healthstar (through a Regulatory Information Service) prior to the date of this announcement (iii) as disclosed in this announcement or (iv) as otherwise fairly disclosed in writing (including facsimile) to Ultrasis or its advisers by or on behalf or Healthstar prior to the date of this announcement;"Effective Date" the date on which the Scheme becomes effective;"EGM" the extraordinary general meeting of Healthstar to be convened to consider any resolution required to approve and implement the Scheme and the Proposal, including any adjournment thereof;"Enlarged Group" Ultrasis Group as enlarged by the Proposal;"Enlarged Share the issued share capital of Ultrasis as enlarged by the issueCapital" of the New Ultrasis Shares;"Existing the Ultrasis Shares in issue at the date of this announcement;Ultrasis Shares""Forms of Proxy" the forms of proxy for use at the Court Meeting and at the EGM;"FSA" the UK Financial Services Authority;"FSMA" the Financial Services and Markets Act 2000 as amended from time to time;"Healthstar" Healthstar Group plc, the holding company of the Healthstar Group;"Healthstar a director of Healthstar;Director""Healthstar Healthstar, and its subsidiary undertakings;Group""Healthstar holder(s) of Healthstar Shares;Shareholder(s)""Healthstar the Healthstar Enterprise Management Incentive Scheme;Share OptionScheme""Healthstar the existing unconditionally allotted or issued and fully paidShares" ordinary shares of five pence each in the capital of Healthstar and, where the context permits, any further such shares which are issued or unconditionally allotted and fully paid (or credited as fully paid), including such shares which are unconditionally allotted or issued or granted or subscribed for upon the exercise of any options granted under the Healthstar Share Option Scheme;"London Stock London Stock Exchange plc;Exchange""Marshall" Marshall Securities Limited;"Mindtech" Mindtech Limited, a wholly owned subsidiary of Healthstar"New Ultrasis the new Ultrasis Shares proposed to be issued by UltrasisShares" (credited as fully paid) as consideration under the Proposal;"Order" the order of the Court sanctioning the Scheme under section 425 of the Companies Act and confirming the reduction of share capital of Healthstar pursuant to the Scheme under section 137 of the Companies Act;"Overseas Healthstar Shareholders resident in, or nationals or citizensShareholders" of, jurisdictions outside the UK;"Panel" the Panel on Takeover and Mergers;"Proposal" the proposed acquisition of all of the issued and to be issued ordinary share capital of Healthstar by Ultrasis by means of the Scheme;"Registrar of the Registrar of Companies of England and Wales;Companies"Regulatory any of the services on the list of Regulatory InformationInformation Services maintained by the Financial Services Authority;Service""Scheme" the proposed scheme of arrangement under section 425 of the Companies Act between Healthstar and Healthstar Shareholders, with or subject to any modification thereof or any addition thereto or condition approved or imposed by the Court and agreed by Healthstar and Ultrasis;"Scheme the formal scheme document to be posted by Healthstar toDocument" Healthstar Shareholders, other than certain Overseas Shareholders, appearing on the register of members on the day before the date of that document, setting out the terms and conditions of the Proposal and the Scheme and including an explanatory statement under section 426 of the Act;"Seymour Pierce" Seymour Pierce Limited;"third party" person, firm, company or body;"UK" or "United the United Kingdom of Great Britain and Northern Ireland;Kingdom""Ultrasis" or Ultrasis plc;"Company""Ultrasis a director of Ultrasis;Director""Ultrasis Group" Ultrasis and its subsidiary undertakings;"Ultrasis holders of Ultrasis Shares;Shareholders""Ultrasis ordinary shares of 0.1 pence each in the capital of Ultrasis;Shares" or"OrdinaryShares""United States" the United States of America, its territories and possessions,or "US" any state of the United States and the District of Columbia;"US Securities the United States Securities Act of 1933, as amended from timeAct" to time;"Wider Healthstar and its subsidiary undertakings, associatedHealthstar undertakings and any other undertaking in which Healthstar and/Group" or such undertakings (aggregating their interest) have a significant interest; and"Wider Ultrasis Ultrasis and its subsidiary undertakings, associatedGroup" undertakings and any other undertaking in which Ultrasis and/or such undertakings (aggregating their interest) have a significant interest. All references to legislation in this announcement are to English legislationunless the contrary is indicated. All references to time in this announcementare to London time unless the contrary is indicated. Any reference to any provision of any legislation shall include any amendment,modification, re-enactment or extension thereof. Words importing the singular shall include the plural and vice versa, and wordsimporting the masculine gender shall include the feminine or neutral gender. Dealing disclosure requirements: Under the provisions of Rule 8.3 of the City Code on Takeovers and Mergers (the"Code"), if any person is, or becomes, "interested" (directly or indirectly) in1% or more of any class of "relevant securities" of Ultrasis plc or HealthstarGroup plc, all "dealings" in any "relevant securities" of that company(including by means of an option in respect of, or a derivative referenced to,any such "relevant securities") must be publicly disclosed by no later than 3.30pm (London time) on the London business day following the date of the relevanttransaction. This requirement will continue until the date on which the Schemebecomes effective or on which the "offer period" otherwise ends. If two or morepersons act together pursuant to an agreement or understanding, whether formalor informal, to acquire an "interest" in "relevant securities" of Ultrasis plcor Healthstar Group plc, they will be deemed to be a single person for thepurpose of Rule 8.3. Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevantsecurities" of Ultrasis plc or of Healthstar Group plc by Ultrasis plc orHealthstar Group plc or by any of their respective "associates", must bedisclosed by no later than 12.00 noon (London time) on the London business dayfollowing the date of the relevant transaction. A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Takeover Panel's website at www.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the ownership or control of securities, or by virtue of any option inrespect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on thePanel's website. If you are in any doubt as to whether or not you are requiredto disclose a "dealing" under Rule 8, you should consult the Panel's website atwww.thetakeoverpanel.org.uk or contact the Panel on telephone number +44 20 76380129; fax +44 20 7236 7013. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ultrasis Plc