MDY Mdy Healthcare

TIDMMDY

RNS Number : 3480X

MDY Healthcare PLC

14 February 2012

MDY Healthcare plc

("MDY Healthcare" or the "Company")

PROPOSED REDUCTION OF SHARE PREMIUM ACCOUNT AND CAPITAL AND RETURN OF CAPITAL TO SHAREHOLDERS

PROPOSED CANCELLATION OF ADMISSION OF ORDINARY SHARES TO TRADING ON AIM PROPOSED RE-REGISTRATION AS A PRIVATE LIMITED COMPANY PROPOSED ADOPTION OF NEW ARTICLES OF ASSOCIATION and NOTICE OF EXTRAORDINARY GENERAL MEETING

14 February 2012: MDY Healthcare plc (AIM: MDY), the strategic investor in healthcare companies, is pleased to announce the following:

-- The proposed return of capital to Shareholders of 52 pence per ordinary share on 10 April 2012

   --      The proposed capital reduction in order to facilitate the return of capital 

-- The proposed cancellation of admission of the Company's ordinary shares to trading on AIM, and the intention to establish alternative arrangements for dealings in the ordinary shares following such cancellation

-- The proposed re-registration of the Company as a private limited company and the associated adoption of new articles of association

-- An extraordinary general meeting of the Company to be held in connection with the above proposals at the offices of Berwin Leighton Paisner LLP, St. Magnus House, 3 Lower Thames Street, London EC3R 6HA at 11.00 a.m. on 8 March 2012

These proposals are conditional on shareholder approval; the reduction of capital and the return of capital are also subject to Court approval.

A circular setting out details of the proposals and containing a notice of extraordinary general meeting will be sent, or made available, to shareholders today. The full circular will be available on the Company's website: www.mdyhealthcare.com.

Grahame Cook, Chairman, said:

"The proposed capital return of 52 pence per ordinary share is significantly more than the share price of 25.5 pence at the time of the appointment of the current Board. We anticipate at least one further return to shareholders in the next 18 months from the Medivance consideration retention and the proceeds from any sale of our investment in Stanmore."

For further information, please contact:

MDY Healthcare plc

 Grahame Cook, Chairman                                       +44 (0) 203 178 5925 

Zeus Capital (Nomad)

   Ross Andrews, Andrew Jones                                 +44 (0) 161 831 1512 

Notes for editors:

About MDY Healthcare

MDY Healthcare plc is a healthcare sector investing company quoted on AIM (ticker symbol: MDY). Further information can be found on the website www.mdyhealthcare.com.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 
 Publication date of the Circular                      14 February 2012 
 Latest time and date for receipt of              11.00 a.m. on 6 March 
  completed Forms of Proxy                                         2012 
 Time and date of Extraordinary General           11.00 a.m. on 8 March 
  Meeting                                                          2012 
 
 Expected Record Time                             6.00 p.m. on 30 March 
                                                                   2012 
 Expected date of Court hearing to confirm                 3 April 2012 
  the Capital Reduction* 
 Expected effective date for the Capital                   4 April 2012 
  Reduction* 
 Expected last day for trading of the                      5 April 2012 
  Ordinary Shares on AIM 
 Expected date for return of 52 pence                     10 April 2012 
  per Ordinary Share to Shareholders registered 
  on the register of members of the Company 
  at the Record Time* 
 Expected date that admission to trading                  10 April 2012 
  of the Ordinary Shares on AIM will be 
  cancelled 
 Earliest date that the Company will                      10 April 2012 
  be re-registered as a private company** 
 

*The Capital Reduction will not take place unless Court approval is obtained. These dates are dependent on, inter alia, the date upon which the Court confirms the Capital Reduction. The Court hearing date is provisional.

**Assumes that there is no application for cancellation of the Re-registration.

References to time in this announcement are to Greenwich Mean Time. Each of the times and dates in the above timetable is subject to change. If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by announcement on a Regulatory Information Service.

PROPOSED REDUCTION OF SHARE PREMIUM ACCOUNT AND CAPITAL AND RETURN OF CAPITAL TO SHAREHOLDERS

PROPOSED CANCELLATION OF ADMISSION OF ORDINARY SHARES TO TRADING ON AIM PROPOSED RE-REGISTRATION AS A PRIVATE LIMITED COMPANY PROPOSED ADOPTION OF NEW ARTICLES OF ASSOCIATION and NOTICE OF EXTRAORDINARY GENERAL MEETING

   1             Introduction 

On 29 November 2011, the Company announced that C.R. Bard, Inc. (a New York Stock Exchange listed company) had completed the acquisition of Medivance, a company in which MDY Healthcare held a minority equity interest, for a total cash consideration of approximately US$250 million. Following the Company's divestment of this interest, the Company has one remaining investment, being that in Stanmore. The Board has previously stated that it intends to return the majority of the funds received from the realisation of its investment in Medivance to Shareholders and has subsequently been in discussions with its advisers on the most efficient and timely way to achieve this. As a result of these discussions, the Company today announces that it intends to make an initial return of 52 pence per Ordinary Share (or such other lesser amount as the Court may permit) to Shareholders on the register of members of the Company at the Record Time and that it is seeking Shareholder approval for a reduction of capital to facilitate such return. It is expected that the return to Shareholders will be made on 10 April 2012.

The Company continues to pursue a strategy of managing its investment in Stanmore with a view to maximising value to Shareholders by divesting this investment at the appropriate time. The Company does not intend to make any new investments. Additional returns to Shareholders are anticipated, following the realisation of the Company's investment in Stanmore, and any receipt of further consideration relating to the realisation of the Company's investment in Medivance. This further consideration is currently held in escrow (as described in paragraph 2 below) and is expected to be received by the Company by the end of May 2013, subject to any warranty and indemnity claims.

In conjunction with the proposed Capital Reduction and return of capital to Shareholders, the Company also proposes the cancellation of admission of the Ordinary Shares to trading on AIM, the re-registration of the Company as a private limited company and the adoption of the New Articles in connection therewith.

The Company also announced earlier today the preliminary results for the reporting period ended 30 September 2011, a copy of which can be found on the Company's website: www.mdyhealthcare.com.

   2             Background to and reasons for the proposals 

Disposal of investment in Medivance

MDY Healthcare held an equity interest of 10.4 per cent. in Medivance, having invested approximately US$6 million through a series of investments, the most recent of which was an investment of US$1 million in June 2009.

On 26 October 2011, the Company announced that C.R. Bard, Inc. had agreed to acquire Medivance for a total cash consideration of approximately US$250 million. Following completion of the acquisition, MDY Healthcare announced that it expected to receive gross cash consideration of approximately US$21.8 million (GBP14.0 million) and on 28 November 2011, it received an initial payment of US$20.0 million (GBP12.8 million). The balance of approximately US$1.8 million is being held in escrow pending potential warranty and indemnity claims and the Directors expect this to be received by MDY Healthcare, subject to the receipt of any such claim, by the end of May 2013.

Capital Reduction

In December 2011, the Company repaid all outstanding debt and accrued interest of GBP1.7 million. The Company now intends, subject to the requisite Shareholder and Court approvals, to return GBP9.5 million or such lesser amount as the Court may permit (being 52 pence per Ordinary Share on a fully diluted basis) to Shareholders registered on the register of members of the Company at the Record Time, expected to be 6.00 p.m. on 30 March 2012, in accordance with the indicative timetable set out above.

The Company proposes to implement the Capital Reduction in order to facilitate a return of capital to Shareholders since the Company no longer anticipates a need for this capital. Pursuant to the 2006 Act, in addition to obtaining the requisite Shareholder approval at the EGM, Court approval is necessary to carry out a capital reduction while the Company is a public limited company.

The Company will retain sufficient cash reserves to cover administrative expenses, including any potential liability to its previous landlord as guarantor following assignment of the lease of its former head office, whilst it awaits receipt of the balance of the Medivance consideration held in escrow and whilst it looks to realise its one remaining investment in Stanmore and, to meet the expenses relating to the Proposals.

De-listing

In light of the disposal of the investment in Medivance and the strategy of the Company, the Board has considered the suitability of the Company remaining on AIM, given that it has only one remaining investment in Stanmore and given the costs associated with maintaining the trading facility on AIM and complying with the continuing obligations of AIM companies. The Board, having consulted its advisers, has concluded that it is not in the best interests of Shareholders as a whole to maintain the trading facility on AIM. The Board therefore proposes the De-listing.

The principal effects that De-listing will have on the Company are as follows:

-- Shareholders will no longer be able to buy and sell shares in the Company through AIM or any other public stock market and therefore liquidity and marketability of the Ordinary Shares will be reduced. However, in order to provide a measure of liquidity in the Ordinary Shares after De-listing, the Company intends to set up, and maintain, a matched bargain trading facility;

-- the Company will no longer be required to announce price sensitive information or other material developments or interim results; and

-- the Company will cease to have a nominated advisor and will no longer be required to comply with the AIM Rules.

Following De-listing, the Board intends to continue to update Shareholders as to material developments in the progress of the Company through the Company's website, www.mdyhealthcare.com.

Under the AIM Rules, the De-listing can be effected following the expiry of twenty business days from the date on which notice of the De-listing is given to the London Stock Exchange provided that the De-listing must be approved by not less than 75% in value of votes cast by Shareholders and can only become effective once five business days have passed since the date on which the requisite Shareholder approval is given.

In order to assist Shareholders and other persons wishing to deal in the Ordinary Shares if the De-listing is approved, the Company is making arrangements with Sharemark to make a Share Dealing Facility available to Shareholders, further details of which will be set out in paragraph 6 of the Circular.

Re-registration

If the De-listing is approved, the Ordinary Shares will no longer be admitted to trading on AIM. In this event, the Board proposes that the Company be re-registered as a private limited company as this will reduce both the costs and complexities of operating the Company, and in particular, will facilitate future returns of capital to Shareholders, without the need to apply to the Court.

It is also proposed to adopt New Articles of association with effect from Re-registration so as to reflect the Company's status as a private limited company. A summary of the principal effects of the Re-registration and adoption of the New Articles will be set out in the Circular.

Implementation

To implement the Proposals, the Extraordinary General Meeting has been convened to consider the resolutions as set below.

   3             Extraordinary General Meeting 

An extraordinary general meeting of the Company is to be held at the offices of Berwin Leighton Paisner LLP, St Magnus House, 3 Lower Thames Street, London EC3R 6HA at 11.00 a.m. on 8 March 2012 at which the following special resolutions will be proposed for the following purposes:

-- Resolution 1: to seek Shareholder approval for the Capital Reduction by cancellation of the Share Premium Account and the Deferred Shares;

   --      Resolution 2: to seek Shareholder approval for the De-listing; and 

-- Resolution 3: to seek Shareholder approval for the Re-registration, adoption of the New Articles and the granting of general authority to the Company's directors to allot Ordinary Shares.

   4             Recommendation 

The Board is of the opinion that the Resolutions are in the best interests of Shareholders as a whole and, accordingly, unanimously recommends Shareholders to vote in favour of the Resolutions to be proposed at the EGM.

DEFINITIONS

The following definitions apply throughout this announcement, unless the context requires otherwise:

 
 "2006 Act"                 the Companies Act 2006 
 "AIM"                      a market operated by the London Stock 
                             Exchange 
 "AIM Rules"                the AIM Rules for Companies as amended 
                             and published by the London Stock Exchange 
                             from time to time 
 "business day"             a day (excluding Saturday, Sunday and 
                             public holidays in England and Wales) 
                             on which banks are generally open for 
                             business in London for the transaction 
                             of normal banking business 
 "Capital Reduction"        the proposed cancellation of the Share 
                             Premium Account and the Deferred Shares 
 "Circular"                 the document dated 14 February 2012, 
                             including the notice of EGM, addressed 
                             to Shareholders 
 "Company" or "MDY          MDY Healthcare plc 
  Healthcare" 
 "Court"                    the Court of Session in Edinburgh 
 "De-listing"               the proposed cancellation of admission 
                             of the Ordinary Shares to trading on 
                             AIM 
 "Directors" or "Board"     the board of directors of MDY Healthcare 
 "Existing Articles"        the articles of association of the Company 
                             as at the date of this document 
 "Extraordinary General     the extraordinary general meeting of 
  Meeting" or "EGM"          MDY Healthcare convened for 11.00 a.m. 
                             on 8 March 2012 (or any adjournment of 
                             it) 
 "Form of Proxy"            the form of proxy enclosed with the Circular 
                             for use by Shareholders in connection 
                             with the EGM 
 "London Stock Exchange"    London Stock Exchange plc 
 "Medivance"                Medivance, Inc. 
 "New Articles"             the articles of association proposed 
                             to be adopted at the EGM pursuant to 
                             Resolution 3 
 "Notice"                   the notice of EGM 
 "Ordinary Shares"          the ordinary shares of 1 penny each in 
                             the capital of the Company 
 "Proposals"                the Capital Reduction, De-listing, Re-registration 
                             and adoption of New Articles 
 "Record Time"              6.00 p.m. on the date that is two business 
                             days immediately prior to the final hearing 
                             of the Court to confirm the Capital Reduction 
 "Re-registration"          the proposed re-registration of the Company 
                             as a private limited company 
 "Resolutions"              the resolutions set out in the Notice 
                             and "Resolution'" shall mean any of them 
 "Shareholders"             holders of Ordinary Shares 
 "Share Dealing Facility"   the matched bargain settlement facility 
                             to be made available to Shareholders 
                             following De-listing to enable them to 
                             sell the Ordinary Shares owned by them 
                             in the market, further details of which 
                             are set out in the Circular 
 "Share Premium Account"    the share premium account of the Company 
 "Stanmore"                 SIW Holdings Limited 
 
 

All references to legislation in this announcement are to the legislation of the United Kingdom 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 words importing the masculine gender shall include the feminine or neutral gender and vice versa.

In this announcement, the exchange rates used are the rates prevailing at the date of the relevant transaction.

This information is provided by RNS

The company news service from the London Stock Exchange

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