Acquisitions

RNS Number:3612U
Matrix Healthcare PLC
19 January 2004

19 January 2004



               Matrix Healthcare plc ("Matrix" or "the Company")

                             Proposed Acquisitions



The Board of Matrix announces that the Company has conditionally agreed to
acquire the entire issued share capitals of Newsham and Woodland for an
aggregate maximum consideration of #2.45 million.



*         Newsham was a dormant company until March 2003, when it purchased
Newsham House, Gloucester, a care home with 39 beds registered for elderly
persons with dementia requiring nursing care.



*         Woodland was incorporated in March 1994 and its business is the
ownership and management of care homes. It currently owns and operates three
care homes with 100 registered beds and is the managing partner in two
partnerships operating two further care homes with 53 registered beds.



*         New bank facilities totaling #9.75 million have been conditionally
arranged with Fortis Bank S.A./N.V. of which #5.4 million will be drawn down on
Completion and #0.6 million will be available as a working capital facility.
The balance of #3.75 million will be available to fund future acquisitions.



*         Conversion of #900,000 Matrix Convertible Loan Stock into 2,727,272
Matrix Ordinary Shares and subsequent sale by Best Investment Limited and Peter
Dewe-Mathews at 40 pence per Matrix Ordinary Share to the Davies and Ellert
Concert Party.



*         Mandatory cash offer of 40 pence per Matrix Ordinary Share by the
Davies and Ellert Concert Party for all of the Matrix Ordinary Shares that they
do not currently own.



*         Proposed change of the Company's name to ADL plc.



*         Proposed appointment of Jeremy Davies, Richard Ellert and Pearl
Jackson to the board as Managing Director, Finance Director and Operations
Director respectively.



Peter Dewe-Mathews, Chairman of Matrix Healthcare commented: "The Acquisitions
and the Offer give Matrix Shareholders the opportunity to remain investors in
Matrix Healthcare in an enlarged group with greater critical mass, a new
executive management team, a new #9.75 million banking facility and a growth
strategy - or to take 40 pence in cash today by exiting their investment in
Matrix Healthcare."



For further information, please contact:



David Rydell/Billy Clegg

Bell Pottinger Financial

020 7861 3232



Richard Swindells

Durlacher Limited

020 7459 3600



Peter Dewe-Mathews

Chairman, Matrix Healthcare plc

01635 247400



Introduction

The Board of Matrix announces that the Company has conditionally agreed to
acquire the entire issued share capitals of Newsham and Woodland for an
aggregate maximum consideration of #2.45 million.



The Newsham Acquisition involves the payment of up to #1.25 million to the
Newsham Vendors. The total #1.25 million consideration due to the Newsham
Vendors will be payable as to #750,000 by the allotment of 1,875,000 Initial
Consideration Shares on Completion and as to #500,000 by the allotment of
1,250,000 Further Consideration Shares dependent upon planning permission being
obtained on surplus land at Newsham House, Gloucester. In addition, Matrix will
assume Newsham's net debt, which is approximately #750,000.



The Woodland Acquisition involves the payment of #1.2 million to the Woodland
Vendors on Completion, which will be satisfied as to #400,000 in cash and
#800,000 by the allotment to the Woodland Vendors of 2,000,000 Initial
Consideration Shares. In addition, Matrix will assume Woodland's net debt, which
is approximately #2.0 million.



In order to provide the necessary finance for the Acquisitions and the Enlarged
Group's on-going requirements, the Company is raising #9.75 million through new
debt facilities with Fortis Bank S.A./N.V., from Completion. Of the new debt
facilities, #6.0 million will be available on Completion, of which #5.4 million
will be drawn down and will be applied to re-financing the Company's existing
borrowings, in funding the cash element of the Woodland Acquisition, to
re-financing #2.75 million debt within Newsham and Woodland and to provide
working capital for the further development of the Enlarged Group. The balance
of #600,000 will be available to the Enlarged Group from Completion as an
overdraft facility for working capital purposes. The #3.75 million balance of
the new debt facilities will be made available to the Enlarged Group for further
acquisitions, as they arise, subject in each case to the prior approval of
Fortis Bank S.A./N.V.



The Board of Matrix also announces that Best Investment and Peter Dewe-Mathews
have today converted their holdings of #850,000 and #50,000 Matrix Convertible
Loan Stock respectively into holdings of 2,575,757 and 151,515 Matrix Ordinary
Shares. Best Investment and Peter Dewe-Mathews today sold 2,727,272 Matrix
Ordinary Shares arising on conversion of their Matrix Convertible Loan Stock to
Jeremy Davies and Richard Ellert (together ''the Davies and Ellert Concert
Party'') at a price of 40p per Matrix Ordinary Share.



As the Davies and Ellert Concert Party has acquired 2,727,272 Matrix Ordinary
Shares, representing approximately 54.4 per cent. of the Company's Share Capital
as enlarged by the conversion of the Matrix Convertible Loan Stock, they are
required pursuant to Rule 9 of the City Code to make a mandatory cash offer for
the remainder of the Share Capital of the Company that they do not already own.



Jeremy Davies is a shareholder in Newsham and Woodland and Pearl Jackson, the
proposed Operations Director, is a shareholder in Woodland and so, as a result
of the issue of the Initial Consideration Shares, Jeremy Davies and Pearl
Jackson will in aggregate acquire a further 3,312,500 Matrix Ordinary Shares,
taking the total shareholding of the Davies and Ellert Concert Party and of
Pearl Jackson to 6,039,772 Matrix Ordinary Shares representing approximately
68.0 per cent. of the Enlarged Share Capital, assuming that no Matrix
Shareholders accept the Offer. The Offer by the Davies and Ellert Concert Party
is being announced simultaneously with this announcement and full details are
contained in the Offer Document being sent to Matrix Shareholders today.



As a result of the conversion of the Matrix Convertible Loan Stock, the
extraordinary general meeting previously convened for 11.30 a.m. on 30 January
2004 will be adjourned indefinitely as the business which was to be considered
at that extraordinary general meeting no longer bears any relevance.



In view of their aggregate size, the Acquisitions constitute a Reverse Takeover
(in accordance with the AIM Rules) and are conditional, inter alia, on the
approval of Matrix Shareholders, which is to be sought at the Extraordinary
General Meeting being convened for 9.30 a.m. on 11 February 2004. Also at the
Extraordinary General Meeting, the Company will seek Matrix Shareholders'
approval to change the Company's name to ADL plc.  An admission document and
circular containing full details of the Acquisitions and the notice of EGM is
being sent to Matrix Shareholders today.



Background to and reasons for the Acquisitions

In Peter Dewe-Mathews' statement accompanying the interim results for the six
months ended 31 March 2003, he confirmed that ''your Directors will continue to
focus on seeking a buyer for the Company's assets at the appropriate time''. In
August 2003, the Davies and Ellert Concert Party approached the Board with a
proposal to purchase Best Investment's Matrix Convertible Loan Stock and reverse
Newsham and Woodland into the Company. The Board received a number of
expressions of interest in the Company's assets at a similar or lower value to
the Offer but none of the others offered Matrix Shareholders the opportunity to
take cash now or to remain as Matrix Shareholders within the Enlarged Group.



The Board believes that the Proposals and the Offer are in the best interests of
Matrix Shareholders. The Board also took note of the fact that, for Matrix
Shareholders who do not wish to accept the Offer, following completion of the
Acquisitions, the Enlarged Group will have greater critical mass, a new
executive management team, new #9.75 million banking facilities and a growth
strategy. In reaching their decision, the Board took note of the fact that the
Davies and Ellert Concert Party would incur an obligation pursuant to Rule 9 of
the City Code to make a mandatory cash offer of 40p per Matrix Ordinary Share
for the remainder of the Share Capital of the Company that they do not already
own. This would give Matrix

Shareholders the opportunity to sell their shares at 40p per Matrix Ordinary
Share, the price paid today by Jeremy Davies and Richard Ellert to Best
Investment and myself for 2,727,272 Matrix Ordinary Shares. Best Investment is a
company controlled by John Spiers, a Director of Matrix.



The Board believes the Acquisitions, the new bank facilities and the proposed
executive management team of Jeremy Davies, Richard Ellert and Pearl Jackson
will significantly improve the prospects for the Company's business, creating a
group of 10 care homes with 374 registered beds which represents a logical point
from which to expand the Enlarged Group further. The New Board intends to use
the new bank facilities to make further acquisitions in the future towards
achieving the Company's strategy.



At the Annual General Meeting being convened for 9.40 a.m. on 11 February 2004,
Jeremy Davies, Richard Ellert and Pearl Jackson will be proposed for election to
the Board as Managing Director, Finance Director and Operations Director
respectively. It is proposed that Peter Dewe-Mathews will become Non-Executive
Chairman and John Spiers and Rupert Lywood will resign as Directors of the
Company. Since July 2000 Pearl Jackson has been contracted as a consultant to
the Company and, during this time, the Company's operational and financial
performance has improved.



Information on Matrix Healthcare

The Company was incorporated in January 1990 and in September 1990 raised
#661,500 under the Business Expansion Scheme. In February 1996 the Company
raised a further #1,539,900 under the Enterprise Investment Scheme and obtained
a quotation on AIM in June 1996. Its business is the ownership and management of
care homes. It currently owns and operates four care homes with 182 registered
beds:



Allambie Court Nursing Home, Nuneaton, is registered for 30 elderly persons with
dementia requiring nursing care.



The Knoll Nursing Home, Bradford, is registered for 42 elderly persons requiring
nursing care.



Morton Close Nursing Home, Keighley, is registered for 55 elderly persons. The
premises comprise Morton Court, with 36 registered beds, and Morton Manor, with
19 registered beds. Morton Manor was closed in 2002 as a result of the changing
regulatory environment which rendered the building obsolescent as a frail
elderly care home. It is the intention of the Board to sell Morton Manor for
residential use.



Nightingale Nursing Home, Bradford, is registered for 55 elderly persons
requiring nursing care and it is operated on the basis of 45 beds. On the same
site is Nightingale Residential Home, a de-registered facility that provided
accommodation for 20 residents until its closure in 2002. The Board intend to
reconfigure this property and seek to re-register it for mental care.



A valuation of the Company's care homes is set out in Christie & Co's valuation
certificate contained in Part III of the admission document and circular being
sent to Matrix Shareholders today.



Further information on the Company is contained in the statutory financial
statements of the Company for the three years ended 30 September 2003, which are
set out in Appendix I to the admission document and circular being sent to
Matrix Shareholders today. The notice convening an Annual General Meeting of the
Company, which will take place immediately after the Extraordinary General
Meeting, is enclosed with the financial statements.



Information on Newsham

Newsham was a dormant company until March 2003, when it purchased Newsham House,
Gloucester, a care home with 39 beds registered for elderly persons with
dementia requiring nursing care.



In the year ended 30 June 2003, Newsham made a profit before tax of #17,581 and
at the period end had net assets of #13,610.  At 19 January 2004, Newsham's sole
care home property was valued at #1.5 million and surplus land on Newsham's
Gloucester site was valued at #0.5 million (assuming planning permission for
development is granted).



Further information on Newsham is set out in Parts III and IV of the admission
document and circular being sent to Matrix Shareholders today.



Information on Woodland

Woodland was incorporated in March 1994 and its business is the ownership and
management of care homes. It currently owns and operates three care homes with
100 registered beds and is the managing partner in two partnerships operating
two further care homes with 53 registered beds:



Woodland Court Nursing Home, Torquay, is registered for 39 elderly persons
requiring nursing care and is operated on the basis of 35 beds.



Woodland House Nursing Home, Torquay, is registered for 30 elderly persons with
dementia requiring nursing care.



Woodland Park Nursing Home, Torquay, is registered for 31 elderly persons
requiring nursing care and is operated on the basis of 25 beds.



Jubilee House, Torquay, is operated by Woodland and is registered for 28 elderly
persons.



South Garth, Exmouth, is operated by Woodland and is registered for 25 elderly
persons and is operated on the basis of 23 beds.



In the year ended 30 June 2003, Woodland made a loss before tax of #(51,497) and
at the period end had net liabilities of #(785,848).  At 19 January 2004,
Woodland's five care home properties were valued at #3.6 million.



Further information on Woodland is set out in Parts III and V of the admission
document and circular being sent to Matrix Shareholders today.



Management of the Enlarged Group

The New Board recognises that the Enlarged Group, with its 10 care homes, will
require a formal operational management structure.



Jeremy Davies, the proposed Managing Director, will be responsible for all
day-to-day operational issues but will pay particular attention to the Enlarged
Group's strategic issues including the identification of acquisition and
development opportunities.



Richard Ellert, the proposed Finance Director, will take responsibility for all
financial management and reporting matters, as well as strategic development
opportunities. Mark Osborne, Matrix's financial controller and company
secretary, will work with and assist Richard Ellert on financial management and
reporting matters.



Pearl Jackson, the proposed Operations Director, will take responsibility for
operational matters on a home-by-home basis. Pearl Jackson is familiar with the
operation of both Matrix's and Woodland's homes as she has acted as a consultant
on operational matters at them.



Each of the Proposed Directors has entered into a service contract with Matrix
conditional upon his or her appointment as a director of the Company at the
Annual General Meeting.  Each Proposed Director will be paid a salary of #50,000
per annum and be entitled to receive 12 months' notice of termination of his or
her appointment from the Company.



Following Completion, the New Board intends to concentrate on improving the
performance of and return on the Enlarged Group's portfolio of care homes. In
addition, the New Board will seek to identify and acquire additional care home
businesses which will be complementary to the Enlarged Group.



Board

As at the date of this document the Board comprises Peter Dewe-Mathews, John
Spiers and Rupert Lywood.  At the Company's Annual General Meeting it is
intended that John Spiers and Rupert Lywood will resign as directors of the
Company and Jeremy Davies, Richard Ellert and Pearl Jackson will be proposed for
election as directors of the Company.



Further details on the Directors and Proposed Directors are contained in Parts I
and VII of the admission document and circular being sent to Matrix Shareholders
today.



Change of name

A resolution will be proposed at the EGM to change the Company's name to ADL
plc. The existing certificates in relation to Existing Matrix Ordinary Shares
will remain valid.



Dividend policy

Subject to a future capital reorganisation of Matrix Healthcare to eliminate the
accrued deficit on its profit and loss account, the New Board intends to pay
dividends following Completion dependent upon the future performance of the
Enlarged Group.



City Code

Messrs Jeremy Davies and Richard Ellert are as Matrix Shareholders treated for
the purposes of the City Code as acting in concert in relation to Matrix. The
purchase of 2,727,272 Matrix Ordinary Shares has resulted in the Davies and
Ellert Concert Party holding approximately 54.4 per cent. of the Existing Matrix
Ordinary Shares.



Under Rule 9 of the City Code when (i) a person acquires shares which, when
taken together with shares already held by him or persons acting in concert with
him, carry 30 per cent. or more of the voting rights of a company subject to the
City Code or (ii) any person who, together with persons acting in concert with
him, holds not less than 30 per cent. but not more than 50 per cent. of the
voting rights of a company subject to the City Code, and such person, or any
person acting in concert with him, acquires additional shares which increases
his percentage of the voting rights, then in either case that person together
with the persons acting in concert with him is normally required to make a
general offer in cash, at the highest price paid by him or any person acting in
concert with him, for shares in the relevant company within the preceding 12
months, for all the remaining equity share capital of the company.



As a result, the Davies and Ellert Concert Party has today made a mandatory cash
offer pursuant to Rule 9 of the City Code to acquire the remainder of the Share
Capital of the Company that they do not already own. The Offer is 40p in cash
per Matrix Ordinary Share which is the highest price paid by them, or any person
acting in concert with them, for shares in the Company within the preceding 12
months. No offer is being made for the Matrix Deferred Shares as they are
effectively worthless.



An offer document containing further information on the Offer is being sent to
Matrix Shareholders today.



If Matrix Shareholders do accept the Offer and Jeremy Davies holds in excess of
50.0 per cent. of the Enlarged Share Capital, those Matrix Shareholders that do
not accept the Offer should be aware that he will not be restricted under the
Code from purchasing further Matrix Ordinary Shares in addition to his holding.
Also the Panel has ruled that the issue of the Further Consideration Shares for
the Newsham Acquisition will not require a further Mandatory Offer under the
Code.



Current trading and prospects

Operating profits since the year end for the period to 30 November 2003 indicate
an improvement on the same period last year, but are not at the levels of the
second half of the financial year to 30 September 2003. The Company's annual pay
review takes effect in October of each year whereas fee increases normally
become effective in April of each year. This tends to result in greater
profitability in the second half of each financial year and it is anticipated
that this pattern will be replicated in the current financial year.



In line with the industry, the Directors and Proposed Directors believe that the
Company should continue to benefit from the current supply and demand situation
that has resulted in higher average occupancies and rising weekly fees.



Extraordinary general meeting

The notice convening an Extraordinary General Meeting to be held at Gossard
House, 7-8 Savile Row, London W1S 3PE at 9.30 a.m. on 11 February 2004 is
contained in the admission document and circular being sent to Matrix
Shareholders today.



Annual general meeting

The notice convening the Annual General Meeting of the Company to be held at
Gossard House, 7-8 Savile Row, London W1S 3PE at 9.40 a.m. on 11 February 2004
(or such later time as the Extraordinary General Meeting of the Company convened
for the same date shall have concluded or been adjourned) is also contained in
the admission document and circular being sent to Matrix Shareholders today.  In
addition to the ordinary business relating to the adoption of the accounts,
re-election of directors and auditors, ordinary resolutions will be proposed to
appoint Jeremy Davies, Richard Ellert and Pearl Jackson as directors of the
Company.



Copies of the admission document and circular will be available from the offices
of Durlacher Limited, 4 Chiswell Street, London EC1Y 4UP.



Terms used in this announcement have the same meaning as those defined in the
admission document and circular being sent to Matrix Shareholders today.



END


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