RNS No 5317j
CRESTACARE PLC
16 July 1999
Not for release, distribution or publication in or into the United States,
Canada, Japan or Australia.
Recommended Cash Offer by Collins Stewart Limited
on behalf of Carat Secre PLC
for CrestaCare Plc
Summary
The Boards of Carat Secre and CrestaCare announce the terms of a recommended
cash offer to be made by Collins Stewart on behalf of Carat Secre to acquire
the entire issued share capital of CrestaCare. The formal offer document is
expected to be despatched to CrestaCare Shareholders today.
* The Offer will be 37p in cash for each CrestaCare Share, which values the
entire existing issued share capital at approximately #70.4 m.
* The Offer represents a premium of approximately 42.3 per cent. to the
closing middle market price of a CrestaCare Share of 26p on 15 July 1999.
* Carat Secre has obtained irrevocable undertakings to accept the Offer
and/or commitments to sell CrestaCare Shares from the Directors of CrestaCare
and certain institutional investors of CrestaCare in respect of, in aggregate,
93,996,488 CrestaCare Shares, representing approximately 49.4 per cent. of
CrestaCare's issued share capital.
* Carat Secre is a newly-incorporated company which has been formed for the
purpose of making the Offer. It is presently beneficially owned by the
Alchemy Investment Plan.
* The management of Four Seasons Health Care PLC, an unlisted nursing home
operator also being acquired by the Carat Secre Group, will join the board of
Carat Secre on the Offer succeeding.
On behalf of the Directors, Sir Matthew Goodwin, Chairman of CrestaCare,
commented:
"The board of CrestaCare believes the Offer represents an opportunity for
shareholders to achieve fair value for their investment while maintaining
opportunities for staff and, above all, maintaining the high standard of care
which has always been sought for CrestaCare's clients. On a personal note, I
would like to wish the management and staff all the best for the years ahead."
Commenting on the Offer, Martin Bolland of Alchemy Partners said:
"We anticipate that the Offer will enhance the ability of CrestaCare to
respond to the opportunities and demands in its market quickly and efficiently
and remove the regulatory and other burdens of being a listed company."
Enquiries:
Carat Secre PLC Tel: 0171 240 9596
Martin Bolland
Collins Stewart Limited Tel: 0171 522 9977
Leigh Collins
Kripa Radhakrishnan
CrestaCare Plc Tel: 0171 767 1000
Sir Matthew Goodwin
Dr. Magdy Ishak-Hanna
ING Barings Tel: 0171 767 1000
Mark Burch
Andrew Owens
Collins Stewart, which is regulated by The Securities and Futures Authority
Limited, is acting for Carat Secre and no one else in connection with the
Offer and will not be responsible to anyone other than Carat Secre for
providing the protections afforded to customers of Collins Stewart nor for
giving advice in relation to the Offer.
ING Barings, which is regulated by The Securities and Futures Authority
Limited, is acting for CrestaCare and no one else in connection with the Offer
and will not be responsible to anyone other than CrestaCare for providing the
protections afforded to customers of ING Barings nor for giving advice in
relation to the Offer.
The Offer will not be made directly or indirectly in or into the United
States, Canada, Australia or Japan and copies of this announcement and any
other document relating to the Offer should not be distributed, forwarded or
transmitted into such countries.
The Loan Notes have not been, and will not be, registered under the United
States Securities Act of 1933 (as amended) or under the securities laws of any
jurisdiction in the United States, nor have any steps been taken to enable the
Loan Notes to be offered in compliance with applicable securities laws of
Canada or Japan and no prospectus in relation to the Loan Notes has been or
will be lodged with, or registered by, the Australian Securities and
Investments Commission. Accordingly, the Loan Notes cannot be offered, sold,
resold or delivered, directly or indirectly, in or into the United States,
Canada, Australia or Japan or any other jurisdiction in which the offer of the
Loan Notes would constitute a violation of the relevant laws or regulatory
requirements or require registration thereof.
Recommended Cash Offer
by
Collins Stewart Limited
on behalf of
Carat Secre PLC
for
CrestaCare Plc
Introduction
The boards of Carat Secre and CrestaCare have today reached agreement on the
terms of a recommended cash offer of 37p per CrestaCare Share, to be made by
Collins Stewart on behalf of Carat Secre, to acquire all of the issued and to
be issued share capital of CrestaCare. The Offer values the existing issued
share capital of CrestaCare at approximately #70.4 million. A Loan Note
Alternative will be made available in respect of the Offer.
Carat Secre is a newly-incorporated UK company formed for the purpose of
making the Offer. It is presently beneficially owned by the Alchemy Investment
Plan. Upon the Offer becoming or being declared unconditional in all respects,
Hamilton Anstead and Robert Kilgour will also invest indirectly in Carat
Secre. Further information in relation to the Carat Secre Group is set out in
this announcement.
The Offer
The Offer will be subject, inter alia, to the conditions and further terms set
out in Appendix I to this announcement and in the formal document containing
the Offer, which is expected to be despatched to CrestaCare Shareholders today
("the Offer Document"). The Offer is being made by Collins Stewart on behalf
of Carat Secre on the following basis:
For each CrestaCare Share 37 p in cash.
The Offer Price represents a premium of approximately 42.3 per cent. to the
Closing Price of 26p on 15 July 1999 (being the last dealing day prior to
this announcement).
Alternatively, CrestaCare Shareholders who validly accept the Offer may elect
to receive Loan Notes, which are guaranteed as to principal by National
Westminster Bank Plc, on the following basis:
For every #1 of cash consideration #1 nominal of Loan Notes.
Reasons for the Offer
The directors of Carat Secre believe that full acceptance of the Offer will:
(a) enable CrestaCare Shareholders to realise their investment in CrestaCare
without incurring dealing charges at a share price which is at a premium of
approximately 42.3 per cent. to the Closing Price on 15 July 1999 (being the
last dealing day prior to this announcement);
(b) remove from CrestaCare the financial, managerial and regulatory burdens of
being a listed company; and
(c) enhance the ability of CrestaCare to respond to the opportunities and
demands in its market quickly and efficiently which may not otherwise be
possible for CrestaCare as a small company subject to the constraints of a
listing on the London Stock Exchange.
Background to and reasons for the recommendation of the Offer
CrestaCare is one of the larger private operators in the UK nursing home
industry. In the opinion of the CrestaCare Directors, CrestaCare's stock
market rating has been affected both by the fall from favour of the long term
healthcare sector in the eyes of institutional investors and by a general
decline of interest in small market capitalisation stocks. In recent years
CrestaCare has pursued a successful strategy of developing specialist care
facilities, thus improving the quality of earnings. However, such developments
inevitably take time to negotiate and execute which impacts on short term
profitability, which is also affected by the significant cost of maintaining
public company status. In addition, in the opinion of the CrestaCare
Directors, the poor market rating has inhibited CrestaCare's ability to
develop and expand its business.
Against this background, the CrestaCare Directors have considered various
alternatives to increase shareholder value. The CrestaCare Directors have come
to the conclusion that the Offer represents an opportunity for shareholders to
achieve fair value for their investment while maintaining opportunities for
staff and, above all, maintaining the high standard of care which has always
been sought for CrestaCare's clients.
Undertakings to accept the Offer
Carat Secre has received irrevocable undertakings to accept the Offer from the
CrestaCare Directors in respect of their entire personal holdings of, in
aggregate, 7,942,712 CrestaCare Shares, representing approximately 4.2 per
cent. of CrestaCare's issued share capital. These undertakings are binding
in the event of a higher competing offer being made.
Irrevocable undertakings to accept the Offer in respect of, in aggregate,
40,297,607 CrestaCare Shares representing, in aggregate, approximately 21.2
per cent. of CrestaCare's issued share capital, have also been received by
Carat Secre from certain institutional shareholders of CrestaCare. These
undertakings will cease to be binding in the event that a higher competing
offer of 41p or more (which is either a cash offer or accompanied by a full
cash alternative) is made by a date falling 10 days after the date of posting
of the Offer Document unless Carat Secre announces a revised offer, which is
on no less favourable terms than such competing offer, within seven days of
such competing offer being made.
In addition, Carat Secre has entered into share purchase arrangements with
certain institutional shareholders of CrestaCare pursuant to which such
shareholders have agreed, subject to the announcement of the Offer, to sell to
Carat Secre, in aggregate, 45,756,169 CrestaCare Shares, at the Offer Price,
representing approximately 24.0 per cent. of the issued share capital of
CrestaCare.
Accordingly, Carat Secre has commitments to accept the Offer in respect of, in
aggregate, approximately 49.4 per cent. of the issued share capital of
CrestaCare.
Save as otherwise disclosed herein, neither Carat Secre nor any of its
directors nor, so far as Carat Secre is aware, any person acting in concert
with Carat Secre, owns or controls any CrestaCare Shares or has an option to
acquire any CrestaCare Shares.
Information on the Carat Secre Group
The Carat Secre Group comprises three newly-incorporated UK companies
established for the purposes of making the Offer and acquiring Four Seasons.
Carat Secre is a wholly-owned subsidiary of Career Cast and has been
established specifically for the purposes of acquiring CrestaCare. Career Cast
is a wholly owned subsidiary of Care Caters and has been formed to acquire
Four Seasons, further details on which are set out below, and to act as a
holding company to Carat Secre and provide it with finance to carry out the
Offer.
Care Caters is the holding company of the Carat Secre Group. It is presently
beneficially owned by the Alchemy Investment Plan. Conditional upon the Offer
becoming or being declared unconditional in all respects, Alchemy Partners
(Guernsey), Hamilton Anstead and Robert Kilgour have agreed, pursuant to the
Shareholders' Agreement described in the Offer Document, to subscribe for
98,025 ordinary shares of 1p each in Care Caters at #1 per share. Following
such subscriptions, the Alchemy Investment Plan will beneficially own
approximately 89.18 per cent. of the issued share capital of Care Caters,
Hamilton Anstead will own approximately 7.64 per cent. and Robert Kilgour will
own approximately 3.18 per cent.
Hamilton Anstead and Robert Kilgour are directors of and the principal
shareholders of Four Seasons. Messrs. Anstead and Kilgour have entered into
service agreements with Care Caters which are conditional on the Offer
becoming or being or been declared unconditional in all respects.
In addition, subject to the Offer becoming or being declared unconditional in
all respects, Alchemy Partners (Guernsey) will subscribe for #44,412,500 A
discounted unsecured loan notes 2005 in Career Cast, the majority of the
proceeds of which will be used to fund the Offer. Hamilton Anstead and Robert
Kilgour (and persons connected with Mr. Kilgour) will be issued, respectively,
#1,000,000 and #2,875,864 B discounted unsecured loan notes 2005 in Career
Cast by way of consideration for the acquisition by Career Cast of the shares
in Four Seasons.
None of Carat Secre, Career Cast or Care Caters has traded since their
respective dates of incorporation or entered into any obligations other than
in connection with the Offer, the purchase of Four Seasons and the financing
thereof.
The boards of Carat Secre, Career Cast and Care Caters each comprise Robert
Barnes and Martin Bolland, who are partners of Alchemy Partners. On the Offer
becoming or being declared unconditional in all respects, Hamilton Anstead and
Robert Kilgour will be appointed to the boards of the companies in the Carat
Secre Group.
Carat Secre has entered into facilities agreements with Morgan Stanley Dean
Witter for acquisition facilities totalling #84 million. These are to be
secured on the assets of Carat Secre. Carat Secre is also under an obligation
to procure security from certain companies within the CrestaCare Group
following completion of the acquisition of CrestaCare.
Further information in respect of Carat Secre, Career Cast and Care Caters and
a description of the financing arrangements for the Offer will be set out in
the Offer Document.
Information on Four Seasons
Four Seasons is an unlisted public company and is the holding company for a
group which owns and operates residential and nursing homes for the elderly
and disabled people and provides nursing services. The Four Seasons group
operates approximately 1,400 beds in 36 homes throughout the UK. The
principal shareholders of Four Seasons are Hamilton Anstead and Robert
Kilgour. The turnover of the Four Seasons group of companies in respect of
the year ended 30 June 1998 was approximately #5.7 million (audited) and as at
that date the Four Seasons group of companies had net assets of approximately
#3.5 million (audited).
Career Cast entered into agreements earlier today with the shareholders of
Four Seasons for the sale by them to Career Cast of the entire issued share
capital of Four Seasons for the sum of #4.3 million, to be satisfied as to #4
million by the issue of B discounted unsecured loan notes 2005 and as to
#300,000 in cash. Completion of the acquisition agreements is conditional,
inter alia, upon the Offer becoming or being declared unconditional in all
respects. The Offer is not conditional on the completion of the acquisition
agreements. Further details of the acquisition agreements will be set out in
the Offer Document.
Information on CrestaCare
CrestaCare's core business has traditionally been the ownership and operation
of nursing homes providing services for the frail elderly, the elderly with
dementia and the young physically disabled. Over the past few years
CrestaCare has pursued a strategy of developing and growing its highly
specialised services and Private Finance Initiative projects. CrestaCare
currently owns and operates a number of units involved with brain injury
rehabilitation, intensive care psychiatry, eating disorders, behavioural
problems and medically led geriatric services. CrestaCare is one of only a
few private healthcare providers in the UK to directly employ its own
psychiatric consultants and neuro -psychiatrists in addition to medical
support staff.
Information on Alchemy Partners
Alchemy Partners is a venture capital investment advisory business established
on 20 January 1997 which advises Alchemy Partners (Guernsey).
Alchemy Partners (Guernsey) is a registered Guernsey company which manages the
Alchemy Investment Plan and carries out investments based on recommendations
put forward by Alchemy Partners. Alchemy Partners (Guernsey) considers any
recommendations and is solely responsible for the final decision to invest.
The Alchemy Investment Plan has invested, or has committed to invest, in
aggregate, approximately #314 million. Investors in the Alchemy Investment
Plan include major banking institutions and pension funds. The Alchemy
Investment Plan comprises 44 limited partnerships, each committed to investing
between #600,000 and #30 million per annum, totalling, in aggregate, more than
#234 million per annum. In addition, it includes investments from the
individual partners of Alchemy Partners.
No investments made on behalf of the Alchemy Investment Plan prior to the
Offer have any known connection with CrestaCare and none of the directors of
Alchemy Partners (Guernsey) has any prior interest in CrestaCare.
Current trading and profit statement
In the annual report and accounts of CrestaCare for the year ended 31 December
1998, which were published on 22 March 1999, the Chairman of CrestaCare made
the following profit statement relating to the year ending 31 December 1999.
"The developments opened in 1998 should continue to improve their occupancy in
1999 and in the early summer the new unit being constructed under the Private
Finance Initiative contract with the Frenchay Healthcare NHS Hospital Trust
campus in Bristol will open. These new units should contribute to an increase
in profits in 1999. We will also be assisted by the recent interest rate
reductions, which will affect approximately half of our bank borrowings of
#46.0 million. Accordingly, the directors anticipate a satisfactory
improvement in results in the current year with profits in the first half of
1999 substantially ahead of the same period in 1998."
As a result of the Offer, CrestaCare is required, under the City Code, to
examine and report on the above profit statement in the Offer Document.
Management accounts for the five months ended 31 May 1999 show that profits
were in line with budget despite occupancy levels in the nursing services
division being below budget and continued pressure on costs. During that five
month period, as expected, profits were substantially above the low level
achieved in the same period in 1998, when a number of new developments were
not yet fully operational.
Despite the continuing pressure on occupancy and costs, the Directors confirm
that they continue to anticipate a satisfactory improvement in pre tax profits
before exceptional items for the year ending 31 December 1999, with pre tax
profits before exceptional items in the first half of 1999 substantially ahead
of the same period in 1998. The Directors do not currently anticipate abnormal
levels of either taxation or minority interests for the year ending 31
December 1999. Given the nature of exceptional items, the Directors are not
yet in a position to anticipate the impact, if any, of exceptional gains or
losses for the year ending 31 December 1999.
Arrangements with the Executive Directors
The Executive Directors will be employed under their current service contracts
with CrestaCare, as amended by letters of amendment dated 14 July 1999. The
letters of amendment provide that the Executive Directors will be employed for
an initial period of 90 days from the Offer becoming or being declared
unconditional in all respects. During the first 70 days of such 90 day
initial period, each Executive Director and CrestaCare have the right to give
notice to terminate such Director's employment with effect from the end of
such 90 day period. If CrestaCare wishes, an Executive Director who has given
such notice of termination will continue to be employed for a further 90 day
period following the initial 90 day period. At the end of either the first
or second 90 day period, if an Executive Director's service contract is
terminated at either party's behest, he will receive either 24 months (in the
case of Dr Magday Ishak-Hanna) or 18 months (in the case of James Ramsay and
Geoffrey Crowe) salary. In addition, a further payment equal to 10 per cent.
of such cash amount due to such Director will be made attributable to loss of
pension and the company car currently used by him will be transferred to him
for no payment.
CrestaCare Share Option Schemes
The Offer extends to any CrestaCare Shares unconditionally allotted or issued
pursuant to the CrestaCare Share Option Schemes on or prior to the time and
date on which the Offer closes (or such earlier date as Carat Secre may
determine, subject to the Code or with the consent of the Panel).
Carat Secre will make appropriate proposals to holders of options under the
CrestaCare Share Option Schemes in due course, to the extent that options
granted under such schemes either have not been exercised or have not expired
during the Offer Period.
Management and employees
The board of Carat Secre has given assurances to the Directors that the
existing employment rights, including pension rights, of the employees of
CrestaCare will be fully safeguarded.
The Executive Directors will remain employed as described above. The non-
executive Directors, namely Sir Matthew Goodwin CBE, Graeme Hart, Jonathan
Charkham and Maxwell Packe, intend to resign from the board of CrestaCare upon
the Offer becoming or being declared unconditional in all respects.
Recommendation
The CrestaCare Directors, who have been so advised by ING Barings, consider
the terms of the Offer to be fair and reasonable. In providing advice to the
CrestaCare Directors, ING Barings has taken into account the CrestaCare
Directors' commercial assessments. Accordingly, the Directors will unanimously
recommend CrestaCare Shareholders to accept the Offer, as they have undertaken
to do in respect of their own personal holdings amounting, in aggregate, to
7,942,712 CrestaCare Shares representing approximately 4.2 per cent. of the
existing issued share capital of CrestaCare.
General
Appendix III contains definitions of certain terms used in this announcement.
This announcement does not constitute an offer or invitation to acquire
securities.
APPENDIX I
Conditions and certain further terms of the Offer
PART A: Conditions of the Offer
The Offer is subject to the following conditions:
(a) valid acceptances of the Offer being received (and where not permitted,
withdrawn) by no later than 3.00 p.m. on 6 August 1999 (or, subject to the
rules of the Code, such later time(s) and/or date(s) as Carat Secre may
decide) in respect of not less than 90 per cent. (or such lesser percentage as
Carat Secre may decide) in nominal value of the CrestaCare Shares affected by
the Offer, provided that, unless agreed by the Panel, this condition will not
be satisfied unless Carat Secre shall have acquired or agreed to acquire
(whether pursuant to the Offer or otherwise) CrestaCare Shares carrying, in
aggregate, more than 50 per cent. of the voting rights then normally
exercisable at general meetings of CrestaCare, including for this purpose, to
the extent (if any) required by the Panel, any votes attaching to CrestaCare
Shares unconditionally allotted or issued, pursuant to the exercise of any
outstanding subscription or conversion rights or otherwise, before the Offer
becomes or is declared unconditional as to acceptances, and for this purpose
(i) the expression "CrestaCare Shares affected by the Offer" shall be
construed in accordance with section 154 of the Companies Act 1931; and (ii)
shares which have been unconditionally allotted but not issued shall be deemed
to carry the voting rights which they will carry upon the holder having been
entered in the register of members of CrestaCare as the holder of such shares;
(b) the Office of Fair Trading indicating in terms reasonably satisfactory to
Carat Secre that it is not the intention of the Secretary of State for Trade
and Industry to refer the proposed acquisition of CrestaCare by Carat Secre to
the Competition Commission;
(c) no Relevant Authority having intervened in a way that would or is
reasonably likely to, and there not being outstanding any statute, regulation,
decision, undertaking or order that would or is reasonably likely to (in each
case to an extent which is material in the context of the Offer):
(i) make the Offer, its implementation, or any acquisition or proposed
acquisition by any member of the Wider Carat Secre Group of any CrestaCare
Shares, or control of CrestaCare by any member of the Wider Carat Secre Group,
illegal, void or unenforceable in any jurisdiction, or otherwise directly or
indirectly restrain, restrict, prohibit, delay or otherwise adversely
interfere with the implementation of, or impose additional material conditions
or obligations with respect to, or otherwise impede or challenge or require
amendment to the terms of, the Offer or any such acquisition;
(ii) require, prevent or delay the divestiture by any member of the Wider
Carat Secre Group of any CrestaCare Shares;
(iii) require, prevent or delay the divestiture or alter the terms
envisaged for any proposed divestiture by any member of the Wider Carat Secre
Group or any member of the Wider CrestaCare Group of all or any material part
of their respective businesses, assets or properties or impose any limitation
on the ability of any of them to conduct any of their respective businesses or
to own any of their respective assets or property or any part thereof;
(iv) impose any material limitation on or materially delay the ability of
any member of the Wider Carat Secre Group or any member of the Wider
CrestaCare Group to acquire or to hold or to exercise effectively, directly or
indirectly, any rights of ownership of shares or other securities (or the
equivalent) in any member of the Wider CrestaCare Group or to exercise
management rights or control over any business carried on by any member of the
Wider CrestaCare Group;
(v) impose any limitation on the ability of any member of the Wider Carat
Secre Group or any member of the Wider CrestaCare Group to integrate or
co-ordinate their respective businesses, or any part of them with the
businesses or any part of the businesses of any other member of the Wider
CrestaCare Group or result in any member of the Wider CrestaCare Group ceasing
to be able to carry on business under the name which it presently does so;
(vi) require any member of the Wider Carat Secre Group or any member of
the Wider CrestaCare Group to offer to acquire any shares or other securities
(or the equivalent) owned by a third party in any member of the Wider
CrestaCare Group other than CrestaCare (other than in implementation of the
Offer or pursuant to section 154 of the Companies Act 1931); or
(vii) otherwise materially adversely affect the business, assets, profits
or prospects of any member of the Wider Carat Secre Group or the Wider
CrestaCare Group taken as a whole;
and all applicable waiting and other time periods during which any Relevant
Authority could intervene having expired, lapsed or been terminated;
(d) all necessary notifications and filings having been made and all
necessary waiting and other time periods (including any extensions thereof)
under any applicable legislation or regulations of any jurisdiction having
expired, lapsed or terminated in each case in respect of the Offer or the
acquisition of any shares in, or control of, CrestaCare by any member of the
Wider Carat Secre Group or any matter arising therefrom or relating thereto
and all authorisations necessary or appropriate or deemed necessary or
appropriate in any jurisdiction for or in respect of the Offer or any
acquisition or proposed acquisition of any shares in, or control of,
CrestaCare by any member of the Wider Carat Secre Group, or to carry on the
business of any member of the Wider CrestaCare Group having been obtained,
from all appropriate Relevant Authorities or (without prejudice to the
generality of the foregoing) from any persons or bodies with whom any member
of the Wider CrestaCare Group has entered into any contractual arrangements
where the absence of such would have a material adverse effect on any member
of the Wider Carat Secre Group and the Wider CrestaCare Group taken as a whole
and such authorisations together with all authorisations necessary or
appropriate for any member of the Wider CrestaCare Group to carry on its
business remain in full force and effect and all filings necessary for such
purpose having been made and there being no notice of any intention to revoke,
suspend, restrict, modify or not to renew any of the same, and all necessary
statutory and regulatory obligations in all relevant jurisdictions having been
complied with;
(e) save as fairly disclosed by CrestaCare to Carat Secre in writing prior to
16 July 1999 specifically for the purposes of the Offer, there being no
provision of any arrangement, agreement, licence, instrument or authorisation
to which any member of the Wider CrestaCare Group is a party, or by or to
which any such member or any of their assets is or may be bound, entitled or
subject, which as a consequence of the Offer or any acquisition or proposed
acquisition by any member of the Wider Carat Secre Group of any shares or
securities in, or a change in the control or management of, CrestaCare or any
member of the Wider CrestaCare Group or otherwise would or is reasonably
likely to result in (in each case to an extent which is material in the
context of the Wider CrestaCare Group taken as a whole):
(i) any such arrangement, agreement, instrument, licence or authorisation
being, or becoming capable of being, terminated or materially adversely
modified or materially affected or any material adverse action being taken or
any onerous obligation or material liability arising thereunder;
(ii) any monies borrowed by, or any other indebtedness or liability,
actual or contingent, of, or any grant available to, any member of the Wider
CrestaCare Group (which is not already payable on demand being or becoming
capable of being declared repayable immediately or prior to their or its
stated maturity or repayment date, or the ability of any such member to borrow
monies or incur any indebtedness being, or becoming capable of being,
withdrawn or inhibited;
(iii) the rights, liabilities, obligations or interests of any other
member of the Wider CrestaCare Group under any such arrangement, agreement,
licence, instrument or authorisation or the interests or business of any such
member in or with any other firm or body or person (or any agreement or
arrangement relating to such interests or business) being terminated, or
materially adversely modified or materially affected;
(iv) any material asset or material interest of any member of the Wider
CrestaCare Group being or falling to be disposed of or charged or any right
arising under which any such asset or interest could be required to be
disposed of or charged or could cease to be available to any member of the
Wider CrestaCare Group;
(v) the creation of any mortgage, charge or other security interest over
the whole or any material part of the business, property or assets of any
member of the Wider CrestaCare Group or any such mortgage, charge or other
security interest becoming, or becoming capable of being, enforced;
(vi) the interest or business of any member of the Wider CrestaCare Group
in or with any person, firm, company or body (or arrangements relating to such
interest or business) being terminated or materially modified or affected;
(vii) any member of the Wider CrestaCare Group ceasing to be able to
carry on business under any name under which it does so at present; or
(viii) the financial or trading position or prospects of any member of
the Wider CrestaCare Group being materially prejudiced or materially adversely
affected,
and no event having occurred which, under any provision of any arrangement,
agreement, instrument, licence, or authorisation to which any member of the
Wider CrestaCare Group is a party, or by or to which any such member may be
bound, entitled or be subject, is reasonably likely to result in any such
event or circumstance, in each case which will or is reasonably likely to have
a material adverse effect on the Wider CrestaCare Group taken as a whole;
(f) no member of the Wider CrestaCare Group having, since 31 December 1998
(save as fairly disclosed in writing to Carat Secre prior to 16 July 1999 or
save as disclosed in the annual report and accounts for the Wider CrestaCare
Group for the year then ended, or otherwise publicly announced by CrestaCare
(by the delivery of an announcement to the Company Announcements Office of the
London Stock Exchange and such announcement being made on release) prior to 16
July 1999):
(i) issued or agreed to or authorised or proposed the issue of additional
shares of any class, or securities convertible into, or exchangeable for, or
rights, warrants or options to subscribe for or acquire, any shares or
convertible securities (save for options granted and any CrestaCare Shares
issued on the exercise of options granted before 16 July 1999 under the
CrestaCare Share Option Schemes);
(ii) save as between CrestaCare and its wholly owned subsidiaries,
recommended, declared, paid or made or proposed to recommend, declare, pay or
make any bonus, dividend or other distribution other than by a wholly owned
subsidiary;
(iii) made or authorised or proposed or announced its intention to
propose any change in its loan capital to an extent which is material in the
context of the Wider CrestaCare Group taken as a whole;
(iv) merged with any body corporate or acquired, disposed of, demerged,
transferred, mortgaged, charged or created any security interest over, any
assets or any right, title or interest in any assets (including shares and
trade investments) or authorised, proposed or announced its intention to
propose any such merger, acquisition, disposal, demerger or transfer;
(v) issued, authorised or proposed or announced an intention to authorise
or propose the issue of any debentures or incurred any indebtedness or
contingent liability which in any such case is material in the context of the
Wider CrestaCare Group taken as a whole;
(vi) purchased, redeemed or repaid or announced any proposal to purchase,
redeem or repay any of its own shares or other securities or reduced or made
any other change to any part of its share capital;
(vii) entered into or materially varied or authorised, proposed or
announced its intention to enter into or vary any contract, transaction or
commitment (whether in respect of capital expenditure or otherwise) which is
of a long term, onerous or unusual nature or magnitude, or which involves or
is reasonably likely to involve an obligation of such a nature or magnitude
and which is material in the context of the Wider CrestaCare Group taken as a
whole;
(viii) entered into or materially varied or authorised, proposed or
announced its intention to enter into or vary any contract, transaction or
arrangement which would be restrictive in any material respect of the business
of any member of the Wider CrestaCare Group and which would have a material
adverse effect on the business of the Wider CrestaCare Group taken as a whole;
(ix) implemented or authorised, proposed or announced its intention to
implement or enter into any reconstruction, amalgamation, scheme, commitment
or other transaction or arrangement which is material in the context of the
Wider CrestaCare Group taken as a whole;
(x) entered into or made an offer (which remains open for acceptance) to
enter into or materially change the terms of any service contract with any
director or senior executive of CrestaCare or any person connected with any
such director or senior executive (within the meaning of section 346 of the
Act);
(xi) waived or compromised any claim which is material in the context of
the Wider CrestaCare Group taken as a whole;
(xii) taken any corporate action, or had any legal proceedings instituted
or threatened against it in respect of, or had any order made, for its winding
up, dissolution or reorganisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar officer of all or a
material part of its assets and revenues, or any analogous or similar event
having occurred in any jurisdiction or been unable to pay its debts or having
stopped or suspended payment of its debts generally or ceased or threatened to
cease carrying on all or a significant part of its business;
(xiii) made any alteration to its Memorandum or Articles of Association;
or
(xiv) entered into any agreement or arrangement or passed any resolution
with respect to or announced any intention to, or proposed to effect, any of
the transactions, matters or events referred to in this condition;
(g) since 31 December 1998 and save as publicly announced by CrestaCare (by
delivery of an announcement to the Company Announcements Office of the London
Stock Exchange and such announcement being made on release) prior to 16 July
1999 or disclosed in the annual report and accounts of CrestaCare for the
financial year ended 31 December 1998 or fairly disclosed in writing to Carat
Secre prior to 16 July 1999:
(i) there having been no material adverse change or deterioration in the
business, assets, financial or trading position or profits or prospects of any
member of the Wider CrestaCare Group which would be material to the Wider
CrestaCare Group taken as a whole;
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings to which any member of the Wider CrestaCare Group is or is
reasonably likely to become a party (whether as plaintiff or defendant or
otherwise) having been threatened in writing, announced or instituted or
remaining outstanding which would in any such case reasonably be expected
materially and adversely to affect the Wider CrestaCare Group taken as a
whole;
(iii) there having been no inquiry or investigation by or complaint or
reference to any Relevant Authority in respect of any member of the Wider
CrestaCare Group and no such inquiry, investigation, complaint or reference
having been threatened in writing, announced or instituted or remaining
outstanding which would in any such case reasonably be expected materially and
adversely to affect the Wider CrestaCare Group taken as a whole; or
(iv) no contingent or other liability having arisen or become apparent to
Carat Secre which would reasonably be expected materially and adversely to
affect the Wider CrestaCare Group taken as a whole;
(h) Carat Secre not having discovered, save as fairly disclosed in writing to
Carat Secre prior to 16 July 1999:
(i) any financial, business or other information about the Wider
CrestaCare Group which has been publicly disclosed at any time by or on behalf
of any member of the Wider CrestaCare Group or disclosed in writing by
CrestaCare (or its directors, acting exclusively in their capacity as
directors of CrestaCare) or professional advisers to Carat Secre or their
professional advisers in the course of due diligence conducted by or on behalf
of Carat Secre is misleading in any material respect, contains a material
misrepresentation of fact or omits to state a fact necessary to make the
information contained therein not misleading in any material respect or;
(ii) that any past or present member of the Wider CrestaCare Group has
not complied with all applicable legislation or regulations with regard to the
disposal, discharge, spillage, leak or emission of any waste or hazardous
substance or any substance likely to impair the environment or harm human
health, or otherwise relating to environmental matters which, in any such
case, would be likely to give rise to any liability (whether actual or
contingent) on the part of any member of the Wider CrestaCare Group which
would or is reasonably likely to be material to the Wider CrestaCare Group
taken as a whole; or
(iii) that there is, or is likely to be, any liability (whether actual or
contingent) to make good, repair, reinstate or clean up any property now, or
previously, owned, occupied or made use of by any past or present member of
the Wider CrestaCare Group under any environmental legislation, regulation,
notice or order of any Relevant Authority which would or is reasonably likely
to be material to the Wider CrestaCare Group taken as a whole;
For the purposes of these conditions:
(a) "Relevant Authority" means any court, central bank, government, government
department or governmental, quasi governmental, supranational, municipal,
statutory, regulatory body or authority, in (in each case) any jurisdiction;
(b) Relevant Authority shall be regarded as having "intervened" if it has
instituted, implemented or threatened to take any action in writing,
proceedings, suit, investigation, enquiry or reference, or made, enacted or
proposed any statute, regulation, decision or order, or required or accepted
any undertaking, or taken any measures or other steps and "intervene" shall be
construed accordingly;
(c) "authorisations" means authorisations, approvals, clearances,
certificates, confirmations, consents, determinations, exemptions, grants,
licences, orders, permissions and recognition's;
(d) the "Wider Carat Secre Group" means Care Caters and its subsidiaries,
subsidiary undertakings, associated undertakings and any other undertakings in
which Care Caters and any such undertaking (aggregating their interests) have
a substantial interest and the "Wider CrestaCare Group" means CrestaCare and
its subsidiaries, subsidiary undertakings, associated undertakings and any
other undertakings in which CrestaCare and any such undertaking (aggregating
their interests) have a substantial interest and, for these purposes,
"subsidiary", "subsidiary undertaking", "associated undertaking" and
"undertaking" have the meanings given by the Act (but for this purpose
ignoring paragraph 20(1)(b) of schedule 4A of the Act) and "substantial
interest" means a direct or indirect interest in 10 per cent. or more of the
voting equity capital of an undertaking.
The Offer will lapse unless the conditions set out above have been fulfilled
or (other than condition (a)), where appropriate, have been determined by
Carat Secre in its reasonable opinion to be and continue to be satisfied or
(if capable of waiver) have been waived no later than midnight on the day
falling 21 days after the latest of the first closing date of the Offer and
the date on which the Offer becomes or is declared unconditional as to
acceptances, or such later date as the Panel may agree provided that condition
(a) shall not be capable of waiver.
Carat Secre reserves the right to waive, in whole or in part, all or any of
conditions (b) to (h) inclusive. Carat Secre shall be under no obligation to
waive or treat as satisfied any of conditions (b) to (h) inclusive by a date
earlier than the latest date specified above for the satisfaction thereof
notwithstanding that the other conditions of the Offer may at such earlier
date have been waived or fulfilled and that there are at such earlier date no
circumstances indicating that any such conditions may not be capable of
fulfilment.
If Carat Secre is required by the Panel to make an offer for CrestaCare Shares
under the provisions of Rule 9 of the City Code, Carat Secre may make such
alterations to the conditions of the Offer, including condition (a) as are
necessary to comply with the provisions of that Rule.
PART B Certain further terms of the Offer
1. The Offer will lapse if it is referred to the Competition Commission before
the later of 3.00pm 6 August 1999 and the date on which the Offer becomes or
is declared unconditional as to acceptances. If the Offer so lapses the Offer
will cease to be capable of further acceptances and persons accepting the
Offer and Carat Secre shall thereupon be cease to be bound by acceptances on
or before the time when the Offer lapses.
2. The Offer is not being made, directly or indirectly, in or into, or by use
of the mails of or by any means or instrumentality of interstate or foreign
commence of, or by any facilities of a national state or other securities
exchange of, the United States, Canada, Australia or Japan and the Offer
cannot be accepted by any such use, means or instrumentality or otherwise from
or within the United States, Canada, Australia or Japan. Accordingly, copies
of this announcement are not being, and must not be mailed or otherwise
distributed or sent in or into or from, the United States, Canada, Australia
or Japan.
APPENDIX II
Financial Effects of Acceptance of the Offer
The following tables set out, for illustrative purposes only, and on the bases
and assumptions set out in the notes below, the financial effects of
acceptance of the Offer on capital value and gross income for an accepting
holder of one CrestaCare Share if the Offer becomes or is declared wholly
unconditional:
A. Increase in capital value under the terms of the Offer
Offer (p) Loan Note
Alternative (p)
Value of one CrestaCare Share (i) 26 26
Cash consideration/Estimated market
value of Loan Notes (ii) 37 36.63
Increase in capital value 11 10.63
This represents an effective increase of 42.3 per cent. 40.9 per cent.
B. Increase in gross income under the terms of the Offer
Gross income from re-investment of 2.005 1.549
cash consideration (iii)/Gross income
from the Loan Notes (iv)
Gross dividend income on one 1.325 1.325
CrestaCare Share (v)
Increase in gross income 0.680 0.224
This represents an effective increase of 51.4 per cent. 16.9 per cent.
Notes:
(i) The value of one CrestaCare Share is based on the Closing Price of 26.0p
on 15 July 1999 (the last dealing day prior to the announcement of the Offer).
(ii) This represents Collins Stewart's estimated valuation of the Loan Notes
of not less than 99p per #1 nominal value, based on market conditions on 15
July 1999 (the last practicable date prior to the publication of this
announcement).
(iii) The gross income from the cash consideration has been calculated on the
assumption that the cash is re-invested so as to yield 5.42 per cent. per
annum, being the gross redemption yield on 14 July 1999 for the FTSE Actuaries
5 year Gilts Index as published in The Financial Times on 15 July 1999 (the
last practicable date prior to the publication of this announcement).
(iv)The gross income from the Loan Notes is based on an annual interest rate
of 4.1875 per cent. calculated as 1 per cent. per annum below LIBOR as at 14
July 1999 (the last practicable date prior to the publication of this
announcement).
(v) The gross dividend income from one CrestaCare Share is based on the
aggregate of (i) the final dividend of 0.73p in respect of the year ended 31
December 1998 and (ii) the interim dividend of 0.33p in respect of the six
months ended 30 June 1998 together, in each case, with an associated tax
credit of 20/80ths of the amount paid.
(vi) Save as disclosed in note (v) above, no account has been taken of any
potential liability to taxation.
APPENDIX III
Definitions
The following definitions apply throughout this press release unless the
context requires otherwise.
"Act" - The Companies Act 1985
"Alchemy Investment Plan" - The discretionary funds managed by Alchemy
Partners (Guernsey) with advice from Alchemy Partners
"Alchemy Partners" - Alchemy Partners or Alchemy Partners (Guernsey) as the
context may require
"Alchemy Partners (Guernsey)" - Alchemy Partners (Guernsey) Limited, the
manager of the Alchemy Investment Plan
"Carat Secre Group" - means Care Caters and its subsidiary and associated
undertakings
"Carat Secre" or "the Offeror" - Carat Secre PLC, a wholly-owned subsidiary of
Career Cast
"Care Caters" - Care Caters Limited
"Career Cast" - Career Cast Limited, a wholly-owned subsidiary of Care Caters
"Closing Price" - the middle market quotation of a CrestaCare Share at the
close of business on a particular trading day as derived from the Daily
Official List of the London Stock Exchange
"Code" or "City Code" - the City Code on Takeovers and Mergers
"Collins Stewart" - Collins Stewart Limited
"Companies Act 1931" - the Companies Act 1931 (an act of Tynwald)
"Directors" or "CrestaCare Directors" - the directors of CrestaCare
"Executive Directors" - each of Dr Magdy Ishak-Hanna, Geoffrey Crowe and James
Ramsay
"CrestaCare" - CrestaCare Plc
"CrestaCare Group" - CrestaCare and its subsidiary and associated undertakings
"CrestaCare Shareholders" - holders of CrestaCare Shares
"CrestaCare Share Option Schemes" - The CrestaCare Holdings Share Option
Scheme and The CrestaCare 1994 Inland Revenue Approved Executive Share Option
Scheme
"Form of Acceptance" - the form of acceptance, election and authority relating
to the Offer accompanying the Offer Document
"Four Seasons" - Four Seasons Health Care PLC
"ING Barings" - ING Barings Limited
"LIBOR" - means the arithmetical mean (rounded down where necessary to the
nearest whole multiple of one-sixteenth of 1 per cent.) of the respective
rates per annum which any two London clearing banks selected by Carat Secre
are prepared to offer six months sterling funds equal to the aggregate nominal
amount of the Loan Notes issued and for the time being outstanding under the
Loan Note Instrument to leading banks in the London inter-bank market for
sterling at or about 11.00a.m. London time on the first day of the relevant
interest period or, if such day is not a business day, on the next succeeding
business day
"Loan Note Alternative" - the alternative whereby CrestaCare Shareholders who
validly accept the Offer may elect to receive Loan Notes instead of some or
all of the consideration to which they would otherwise have been entitled
under the basic terms of the Offer
"Loan Notes" - the guaranteed loan notes 2006 to be issued by Carat Secre
"London Stock Exchange" - London Stock Exchange Limited
"Offer" - the recommended cash offer by Collins Stewart on behalf of Carat
Secre to acquire all the CrestaCare Shares not already held by the Offeror on
the terms set out in the Offer Document and in the Form of Acceptance
including, where the context requires, the Loan Note Alternative and
including, where the context requires, any subsequent revision, variation,
extension, re-introduction or renewal of such offer
"Offer Price" - 37p per CrestaCare Share
"Panel" - the Panel on Takeovers and Mergers
"Shareholders' Agreement" - the agreement, details of which are set out in the
Offer Document
"UK" - the United Kingdom
"United States" - the United States of America, its territories and
possessions, any state of the United States of America, the District of
Columbia and all other areas subject to its jurisdiction
END
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