Sydney, May 16, 2007 AEST (ABN Newswire) - IBA Health Limited (ASX: IBA) ("IBA"), Australia's largest listed eHealth company, today announced that IBA and the board of iSOFT Group plc (LSE: IOT) ("iSOFT") have reached agreement on the terms of a recommended all-share offer under which IBA will acquire the entire ordinary share capital of iSOFT, creating one of the world's largest healthcare information systems providers.
Under the terms of the offer, to be effected by a scheme of arrangement, iSOFT shareholders will be entitled to receive 1.1 new IBA shares for each iSOFT share, valuing each iSOFT share at A$1.38 (58.1 pence) and iSOFT's equity capital at approximately A$333 million (GBP140 million). IBA also announced today that:
- it has successfully launched and allocated a A$54.5 million conditional placement of 51.9 million IBA shares at an issue price of A$1.05, which was over-subscribed by a range of international and domestic institutions;
- a A$145.4 million renounceable rights issue offering IBA shareholders 2 new IBA shares at a price of A$1.05 per share for every 5 shares they own at 24 May 2007 has been fully underwritten by ABN AMRO Rothschild; and
- ABN AMRO has agreed to provide to IBA new debt facilities of GBP130 million (A$309 million), subject to satisfying a number of conditions.
These funds will enable IBA to refinance iSOFT's existing bank facilities, which are repayable on a change of control, and will provide the enlarged group with working capital, an appropriate capital structure and a strong balance sheet.
The offer provides significant benefits for IBA's shareholders and is expected to increase IBA's FY2008 earnings per share significantly before amortisation of acquisition-related intangibles and one-off integration costs, and after expected synergy benefits. Full run rate annual cost synergies totalling approximately A$27 million, arising primarily from a reduction of overheads through combining infrastructure and premises, are expected to be realised in FY2009.
The merger of IBA and iSOFT will create one of the world's largest healthcare IT providers, with an installed base of approximately 13,000 healthcare systems across the UK, Ireland, continental Europe, Africa, the Middle East, Asia, Australia and New Zealand. The two companies have complementary geographical footprints and product portfolios, and it is expected that considerable revenue growth opportunities can be created through cross-selling a larger product portfolio to a broader customer base. The enlarged group will also be able to benefit from its increased offshore IT development resources and other economies of scale, which are expected to enable it to improve margins.
Mr Gary Cohen, executive chairman of IBA, said: "The merger of IBA and iSOFT is a continuation of our international growth strategy, started three years ago. Through combining the experienced management and technical expertise of the two businesses, together with the financial strength provided by the capital raising, the enlarged group will deliver exciting growth and value to shareholders, customers and employees. With iSOFT's key position in the UK National Programme for IT (NPfIT), which is expected to contribute revenue of more than A$700 million over the life of the contract, IBA will have an influential reference site for future worldwide deployment.
"We are very pleased with the book-build for the conditional placement, which closed over-subscribed. Institutional and sophisticated investors in the UK, Asia, Australia and New Zealand clearly recognised the high quality of the merger plan and the significant opportunity to create a company capable of operating on a global scale."
Mr John Weston, chairman and acting CEO of iSOFT, stated in an announcement which was released in the UK and is attached to this release: "Since our AGM last October we have conducted a thorough review of all the options open to iSOFT to secure its long term funding and to determine the most appropriate route forward. We believe that this offer from IBA and the associated refinancing of the combined business's balance sheet will enable continuity on NPfIT on a sound footing and will establish a platform for growing the business in the future. It is also recognition of the considerable progress we have made as a company since the middle of 2006."
A break fee of GBP1.4 million (A$3.3 million), payable in certain circumstances, has been agreed between IBA and iSOFT.
Key Details of the Offer
The offer will be effected through a scheme of arrangement under section 425 of the UK Companies Act under which iSOFT shareholders will be entitled to receive 1.1 IBA consideration shares for each iSOFT share held and iSOFT will become a wholly-owned subsidiary of IBA.
The total cost of acquiring iSOFT is estimated to be approximately A$368.5 million which reflects:-
- the issue of 1.1 IBA shares in exchange for each iSOFT share. The number of iSOFT shares assumed at completion has been calculated as 241.1 million existing iSOFT shares including 8.6 million new iSOFT shares that are expected to be issued on crystallisation of iSOFT warrants. This will result in the issue of 265.2 million IBA consideration shares to iSOFT shareholders in exchange for their 241.1 million iSOFT shares. The 265.2 million IBA consideration shares issued at the current IBA share price of A$1.255 at 4 May 2007 equate to a consideration of approximately A$333 million; and
- costs directly associated with the offer of A$35.7 million which comprise advisory costs of c.A$21.9 million and iSOFT's outstanding PIK interest payment of A$13.8 million (GBP5.6 million) representing the amount payable from 1 January 2007 to the expected completion date of the offer.
The IBA consideration shares issued to iSOFT shareholders pursuant to the offer will account for approximately 33.1% of the enlarged group's share capital following completion of the offer, the conditional placement and the rights issue.
The offer is conditional upon, among other things:-
- the approval of a majority in number of those iSOFT shareholders present and voting, either in person or by proxy, at the scheme meeting and representing 75% or more in value of all iSOFT shares held by such iSOFT shareholders;
- the passing of a special resolution necessary to approve the scheme by iSOFT shareholders at the iSOFT EGM (which requires a majority of at least 75% of the votes cast); and
- other conditions that must be satisfied or waived, including obtaining the consent of CSC,
iSOFT's largest customer, to the change in control of iSOFT as a result of the completion of the offer.
Conditional placement of IBA shares
The conditional placement was undertaken by ABN AMRO Rothschild via an institutional and sophisticated investor book-build in Australia and overseas. The placing price of A$1.05 per share represents a 16.3% discount to the closing price of A$1.255 on the day before ASX granted a trading halt for the conduct of the conditional placement. The conditional placement represents approximately 15% of IBA's pre-existing issued capital.
The conditional placement is subject to a number of conditions, including completion of the offer and CSC consenting to the change of control of iSOFT. Accordingly, subscribers to the conditional placement (unlike subscribers for new shares in the rights issue) will only pay for and be issued with new IBA placement shares upon satisfaction of these conditions.
Settlement of the conditional placement is expected to occur by 1st August 2007. The holders of the new IBA placement shares will not be entitled to participate in the rights issue.
Rights issue of IBA shares
The renounceable rights issue will provide existing investors with the opportunity to subscribe for 2 new IBA rights issue shares for every 5 existing IBA shares held on the record date at A$1.05 per share, the same price at which the conditional placement was offered. The rights issue is fully underwritten by ABN AMRO Rothschild.
A total of up to approximately 138.5 million new IBA rights issue shares will be issued under the rights issue. The rights issue price represents a 16.3% discount to the closing price of A$1.255 on the day before ASX granted a trading halt for the purpose of allowing IBA to approach institutional investors to raise equity in connection with the offer.
The rights issue will be made pursuant to a prospectus which has been lodged with ASIC today and will be dispatched to all eligible shareholders on or about 25 May 2007. IBA shareholders wishing to take up their entitlement will need to complete an entitlement and acceptance form which will accompany the prospectus. To be eligible to participate in the rights issue, IBA shareholders must have been registered holders of IBA shares at the record date (24 May 2007), with registered addresses in Australia, New Zealand, Hong Kong, the United Kingdom, the Sultanate of Oman or the United States.
The entitlements are renounceable, which means that eligible shareholders who do not wish to take up their entitlement may choose to sell their entitlements on the ASX. Each individual entitlement may be dealt with separately.
If the offer does not complete, IBA will seek to return an amount approximately equivalent to the funds raised from the rights issue to shareholders net of fees and expenses associated with the rights issue.
The rights issue prospectus is available as a separate document and is available on IBA's website www.ibahealth.com.
New debt facilities
ABN AMRO has agreed to provide IBA with new debt facilities of GBP130 million (A$309 million) subject to a number of conditions including the completion of the offer, CSC consenting to the change of control of iSOFT and (i) in the case of the new term loan facility, receipt by IBA of at least GBP80 million (c.A$190 million) subscriptions under the conditional placement and rights issue and (ii) in the case of the new bank guarantee facility and new revolving credit facility, the underwriting of the conditional placement remaining in full force and effect at the time of first utilisation.
Summary of key dates (these dates are subject to change and indicative only):
Rights issue DateLodgement of prospectus with ASIC and announcement of the rights issue 16 May 2007Rights trading commences 18 May 2007Record date for entitlements under the rights issue 24 May 2007Prospectus and entitlement and acceptance forms despatched 25 May 2007Rights trading ends 1 June 2007New shares commence trading on a deferred settlement basis 4 June 2007Closing date for acceptances and payment in full 8 June 2007Allotment of new shares 18 June 2007Despatch of holding statements 19 June 2007Normal trading commences for new shares on ASX 20 June 2007MergerAnnouncement of the merger 16 May 2007Posting of scheme document 12 June 2007iSOFT scheme meeting and iSOFT EGM 6 July 2007Court hearing to sanction scheme 25 July 2007Court hearing to enforce capital reduction 27 July 2007Scheme and capital reduction become effective 30 July 2007Conditional placementSettlement of shares issued under the conditional placement 1 August 2007
The attached announcement has been released in the UK. Please refer to the rights issue prospectus for A$ equivalent conversions from GB Pounds.
Contact
Gary Cohen
Executive Chairman
IBA Health Limited
Phone: +61 2 8251 6700
Email: gary.cohen@ibahealth.com
Media
Greg King
Communications and Business Development Director
IBA Health Limited
Phone: +61 413 621 111
Email: greg.king@ibahealth.com
Anthony Tregoning
Managing Director
Financial & Corporate Relations
Phone: +61 2 9235 1666 or +61 407 231 282
Email: a.tregoning@fcr.com.au
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