HMI to consolidate ownership of two hospitals in Malaysia for RM557m

HEALTH Management International (HMI) will consolidate the ownership of its two hospitals in Malaysia for an aggregated purchase price of RM556.5 million (S$183.2 million) to facilitate its regional growth strategy.

The consolidation of its 48.9 per cent-owned Mahkota Medical Centre (MMC) and 60.8 per cent-owned Regency Specialist Hospital (RSH) to 100 per cent each will create an enlarged listed healthcare platform, said HMI in a statement to the Singapore Exchange.

The immediate financial benefit that can be expected from the consolidation is a "clearer ownership structure" with 100 per cent of the earnings of MMC and RSH being attributable to HMI shareholders.

HMI will fund the purchase through a combination of cash and new HMI shares to be issued to the non-controlling shareholders of MMC and RSH.

Existing non-controlling interests at MMC and RSH will become shareholders at the HMI level as part of this consolidation, it elaborated.

The cash component will be funded primarily by a S$62 million senior secured five-year term loan, a renounceable rights issue of new HMI shares of up to S$18.5 million, and internal cash resources.

The rights issue of up to 32.4 million shares will be offered at 57 Singapore cents each on the basis of 11 rights shares for every 200 HMI shares.

HMI will also issue an aggregate 199.8 million consideration shares at the issue price of 57 Singapore cents each.

On a pro-forma basis for FY2016, the enlarged hospital group will have close to RM400 million revenue, RM90 million EBITDA ( earnings before interest, tax, depreciation and amortisation) and RM36 million net income, all attributable to HMI shareholders.

The exercise is earnings accretive, and will increase the fully diluted earnings per share by 30.4 per cent on a pro-forma basis.