Sydney, Mar 12, 2009 AEST (ABN Newswire) - IBA Health Group Limited (ASX:IBA)(PINK:IBATF) - Australia's largest listed health information technology company today announced the launch of an equity raising to reduce debt and take advantage of its position as a global leader in the growing Health IT industry.
KEY POINTS
- IBA today launched an equity raising of up to $124 million comprising a 2 for 7 accelerated non-renounceable pro-rata entitlement offer ("Entitlement Offer"), at an offer price of $0.55 per share.
- The institutional component of the Entitlement Offer, representing approximately $77 million is committed:
- IBA's largest shareholder, AEP Financial Services Holdings Pty Ltd ("AEP"), has confirmed its support for the Entitlement Offer and has committed to take up its full pro-rata entitlement under the Entitlement Offer, equivalent to approximately $32 million; and
- The balance of the Institutional Entitlement Offer (approximately $45 million) is underwritten by ABN AMRO and UBS.
- IBA intends to use the proceeds of the Entitlement Offer to retire subordinated borrowings from AEP and other senior borrowings.
- This debt reduction significantly strengthens IBA's capital position and gearing ratios. Based on committed proceeds under the Institutional Entitlement Offer:
- IBA's pro forma gearing ratio (net debt / equity) as at 31 December 2008 improves from 45% to 30%; and
- IBA's pro forma net debt / EBITDA ratio improves from 2.3x to 1.8x for the 12 months ended 31 December 2008.
- Post the Entitlement Offer, the only remaining bank facility is with ABN AMRO Bank N.V., which matures in August 2011.
- Based on committed proceeds under the Institutional Entitlement Offer and associated debt and finance costs reduction, the Entitlement Offer is approximately 7% accretive to underlying EPS and approximately 30% accretive to statutory EPS for the 12 months ended 31 December 2008, after adjusting for the bonus element of the Entitlement Offer.
Executive Chairman and CEO, Gary Cohen, said: "The equity raising places IBA in a strong capital position to continue to benefit from investment in health IT by governments worldwide, and the computerisation of healthcare records. The outlook for the company is robust, and the Entitlement Offer provides all eligible shareholders with an equal opportunity to participate in the future growth of our business. We are delighted that AEP continues its strong support for IBA by committing to participate in this capital raising. AEP's support as a cornerstone shareholder has contributed to the successful acquisition and integration of iSOFT and this further capital commitment re-affirms AEP's long term, strategic support for IBA".
ENTITLEMENT OFFER
IBA has commenced an accelerated non-renounceable pro-rata entitlement offer, at an offer price of $0.55 per share. The Entitlement Offer will be conducted on the basis of 2 new IBA ordinary shares ("New Shares") for every 7 existing IBA ordinary shares ("Shares") held ("Entitlement") at 7.00pm AEDT on Tuesday, 17 March 2009 ("Record Date") .
The offer price of $0.55 per New Share represents a 29% per cent discount to the closing price of Shares on 11 March 2009 . New Shares issued under the Entitlement Offer will rank pari passu with IBA's Shares.
The Entitlement Offer comprises an institutional component ("Institutional Entitlement Offer") of approximately $77 million and an offer to eligible retail shareholders to participate on the same terms ("Retail Entitlement Offer"). ABN AMRO and UBS have been appointed Joint Lead Managers to the Entitlement Offer and have underwritten the Institutional Entitlement Offer , except for the portion that will be taken up by AEP. The Retail Entitlement Offer is not underwritten.
IBA's largest shareholder, AEP, has confirmed its support for the capital raising and has committed to take up its full pro-rata entitlement under the Entitlement Offer, equivalent to approximately $32 million.
For the Institutional Entitlement Offer, New Shares equal in number to those not taken up by IBA's eligible institutional shareholders and those which would otherwise have been offered to ineligible institutional shareholders will be offered for subscription to eligible institutional shareholders and selected institutional investors through a volume bookbuild process at the offer price of $0.55 per New Share.
IBA expects to announce the outcome of the Institutional Entitlement Offer to the market prior to the start of trading on 13 March 2009, with trading expected to resume at commencement of trading on ASX on that date.
Further details of the Entitlement Offer and the timetable are included in Annexure A to this announcement.
AEP'S ENTITLEMENT TO ADDITIONAL CONVERTIBLE NOTES
Under the terms of the convertible note arrangements with AEP, if IBA conducts a rights issue, it is required to propose or effect a transaction of similar effect in relation to the convertible notes (the "Existing Convertible Notes"). As a consequence, AEP is entitled to subscribe for 2 new convertible notes ("Additional Convertible Notes") for every 7 Existing Convertible Notes held at the Record Date at a price of $0.55 per Additional Convertible Note, equivalent to approximately $7.2 million. The Additional Convertible Notes will be issued on otherwise the same terms as the Existing Convertible Notes, in particular they can be converted into ordinary shares of IBA on a one for one basis. The offer of Additional Convertible Notes is open until 7 April 2009. AEP is under no obligation to subscribe for all or any of the Additional Convertible Notes.
DEBT REDUCTION
The proceeds of the Entitlement Offer will be used to retire subordinated secured borrowings of $60 million (plus accrued interest) from AEP which incur an annual interest cost of 10.5% plus 4.0% PIK margin plus warrants, a revolving bank facility of $9 million from HSBC Bank Australia with the balance used to retire senior secured borrowings of ABN AMRO Bank N.V.
Based on committed proceeds under the Institutional Entitlement Offer of approximately $77 million, IBA's net debt on a pro forma basis as at 31 December 2008 will reduce from $322 million to $245 million. The table below sets out IBA's net debt position as at 31 December 2008 on an actual basis and, for illustrative purposes, on a pro forma basis as though the Institutional Entitlement Offer was completed and the New Shares under the Institutional Entitlement Offer were issued on 31 December 2008. The table is based on foreign exchange rates as at 31 December 2008.
Contact
Gary Cohen
Executive Chairman & CEO
IBA Health Group Limited
Tel: +61-2-8251-6700
Email: gary.cohen@ibahealth.com
Stuart Kelly
Director Corporate Affairs
IBA Health Group Limited
Tel: +61-2-8251-6769
Mobile: +61-404-082-361
Email: stuart.kelly@ibahealth.com
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