08/01/2007 - 12:59

AHG queries PharmAust value claims

08/01/2007 - 12:59

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Advance Healthcare Group Ltd has questioned claims by dissident shareholder PharmAust Ltd which made a surprise merger offer on Friday.

AHG queries PharmAust value claims

Advance Healthcare Group Ltd has questioned claims by dissident shareholder PharmAust Ltd which made a surprise merger offer on Friday.

AHG has put out a statement today disputing the valuation comparisons made by PharmAust which has made a 1.5 cents per share merger offer.

PharmAust claimed this was 50 per cent above a recapitalisation agreement which was accepted by AHG shareholders in August in a contentious vote being disputed by PharmAust.

Today, AHG said the price paid by private equity player Hawkesbridge Ltd was 2.4 cents per share, a 60 per cent premium to the PharmAust offer. Hawkesbridge and its associates have since sold their entire convertible note holding in AHG to Covenant Nominees Pty Ltd, an entity linked to Perth businessman Michael Boyd. The sale will require the approval of AHG shareholders at a meeting proposed for March, during which they will also be asked to ratify a number of resolutions from the August meeting which are the subject of litigation.

AHG and PharmAust were today in mediation over the contentious vote, a dispute which AHG said had been costly and delayed the relisting of its shares.


Below is the full announcement from AHG:

A further update to AHG's 29th November 2006 ASX announcement with regard to the sale to Covenant Nominees Pty Ltd of the entire convertible note holding in the Advance Healthcare Group Ltd of Hawkesbridge Limited and HET No 1 Pty Ltd. The sale will also include Covenant acquiring 80,000,000 shares in the company from Hawkesbridge Limited reducing Hawkesbridge's shareholding in the company to approximately 5%.

Sale Agreement between Hawkesbridge Limited, HET No1 Pty Ltd and Covenant Nominees Pty Ltd

Hawkesbridge has advised that the formal Sale Agreement between Hawkesbridge
Limited, HET No 1 Pty Ltd and Covenant Nominees Pty Ltd was signed today
Monday 8th January.

Shareholder Meeting

The sale will require the approval of AHG shareholders at an extraordinary meeting expected to be held in March. At the extraordinary shareholders meeting shareholders will also be asked to ratify a number of the resolutions from the August 2006 AGM which are the subject of litigation by Pharmaust Ltd, which AHG believes should enable the litigation to be resolved without incurring the costs of a trial.

Covenant Loan

As announced to the ASX on the 29th November a loan of $1 million has been provided by Covenant Nominees Pty Ltd to AHG.
These monies were received on December 13th 2006 following approval by the AHG Board and the subsequent signing of a loan agreement between the two parties. The purpose of the loan is to assist the company with its ongoing working capital.
This loan together with capitalised interest is convertible into shares in the company at 2.5 cents per share and is repayable on 13 June 2007 unless converted or extended.

Hawkesbridge Loan

Hawkesbridge Limited has provided an additional loan facility of $2 million to assist with AHG's ongoing funding. $1.45 million has been provided with the balance to be available by the end of January and is repayable on the 30th June 2007.

PharmAust Litigation

This litigation is ongoing with a mediation conference being held today the 8th January.
If there is no resolution to the matter then a trial is due to commence in mid February. AHG's Directors are extremely disappointed that the much anticipated re-listing of the Company's shares has been delayed since August 2006 due to this litigation.
In spite of this litigation which has been both costly and time consuming, the Company has continued to follow it's previously outlined strategy to drive performance improvement to turn the AHG business around and restore shareholder value.

The Board and Management looks forward to completing the business turnaround plan during 2007.

Pharmaust Announcement

With reference to the announcement made to ASX by Pharmaust on 5 January 2007, AHG notes that the announcement contains a number of incorrect and incomplete statements.

By way of background Pharmaust sent an email to a director of AHG on 29 December 2006, which has yet to be formally considered by the AHG Board, advising of a proposal to make an offer to shareholders at a price not exceeding $0.015.
AHG formally invited Pharmaust to make a merger proposal several months ago and agreed to provide Pharmaust access to documentation for the purpose of due diligence subject to Pharmaust signing a confidentiality deed.
Prior to receipt of the email of 29 December 2006, AGH had received no formal response from Pharmaust and have still received no response in relation to the request for a confidentiality deed to be signed.
AHG notes that the Pharmaust ASX announcement contains substantially more detail about the proposal than the original email memorandum received by AHG.
AHG also notes that contrary to the Pharmaust announcement, the shares issued to Hawkesbridge Limited after the 2006 AGM were issued at an average price of $0.024 per share, 60% higher than the proposed offer price referred to in the Pharmaust announcement.
Pharmaust have never explained to AHG why they are seeking to overturn in Court the conversion of debt held by Hawkesbridge Limited to equity at $0.0245 per share in circumstances where Pharmaust consider AHG shares to be worth at best 60% less than the conversion price.
AHG will make a further announcement once it has clarified with Pharmaust the details of its proposal and the proposal has been considered by the AHG Board.

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