Loan stock term extension

RNS Number:1449U
Matrix Healthcare PLC
13 January 2004


Embargoed until 7.00 a.m.
13 January 2004

                 Matrix Healthcare plc ("Matrix" or "Company")
                  Extension of term of convertible loan stock


The board of directors of Matrix ("Board") has today posted a circular to
Matrix's holders of ordinary shares of 5p each ("Ordinary Shares") ("Matrix
Shareholders") detailing plans to extend the term of Matrix's #900,000 10 per
cent. secured convertible redeemable loan notes ("Convertible Loan Stock") for a
further 12 months to 31 January 2005.  The Company's Convertible Loan Stock is
held as to #850,000 by Best Investment Limited ("Best Investment") and as to
#50,000 by Peter Dewe-Mathews, chairman of the Company and is currently
repayable on or before 31 January 2004.  John Spiers, a director of the Company,
has a controlling interest in Best Investment.

The extension of the term of the Convertible Loan Stock does not itself require
the approval of Matrix Shareholders.  However, the extension does require that
Best Investment obtains an extension to the waiver by the Panel on Takeovers and
Mergers ("Panel") of the obligation which would otherwise have arisen on Best
Investment under Rule 9 of the City Code on Takeovers and Mergers ("Code") to
make a general offer for all the Ordinary Shares not already owned by it upon
the conversion of its Convertible Loan Stock, which would result in it holding a
maximum of approximately 60 per cent. of the enlarged issued ordinary share
capital.  Under Rule 9 of the Code, any person or group of persons acting in
concert who acquires shares which, when taken together with shares already held
by him or them, carry 30 per cent. or more of the voting rights of a public
company is normally required by the Panel to make a general offer to
shareholders to acquire the balance of the shares.

The circular posted to Matrix Shareholders today contains a notice of
extraordinary general meeting at which the approval of Matrix Shareholders will
be sought to the extension of the waiver by the Panel of Best Investment's Rule
9 obligation detailed above.

None of the Convertible Loan Stock has yet been converted and, as noted above,
it must be redeemed on 31 January 2004 at the latest.  It was envisaged at the
time of issue of the Convertible Loan Stock that it would be redeemed from the
proceeds of sale of the Company's nursing homes.  The Company has not yet sold
the nursing homes.  The Board has considered alternative sources of finance to
repay the Convertible Loan Stock and believe none of the alternatives to be
commercially viable.

The holders of the Convertible Loan Stock have therefore agreed, conditionally
upon the approval by Matrix Shareholders, other than Best Investment, of the
extension until 31 January 2005 by the Panel, conditionally upon the passing of
an ordinary resolution ("Resolution") at an extraordinary general meeting of the
Company, of its waiver of the obligation which would otherwise arise for Best
Investment to make a general offer for all the Ordinary Shares not already owned
by it upon the conversion of its Convertible Loan Stock, to extend the repayment
date of the Convertible Loan Stock until 31 January 2005.  Apart from the
extension of the repayment date, the Convertible Loan Stock will continue to be
held on the same terms as at present.

The extension of the repayment date of the Convertible Loan Stock is a related
party transaction for the purposes of the AIM Rules.  Peter Dewe-Mathews and
John Spiers, who has a controlling interest in Best Investment, as related
parties, have taken no part in the Board's deliberations in relation to the
extension of the repayment date of the Convertible Loan Stock.

Rupert Lywood, the Independent Director, who has been so advised by Durlacher
Limited, the Company's Nominated Adviser for the purposes of the AIM Rules,
considers that the extension of the repayment date of the Convertible Loan Stock
is fair and reasonable so far as the Matrix Shareholders are concerned.

Notice convening an extraordinary general meeting of the Company to be held at
11.30 a.m. on 30 January 2004 at Gossard House, 7-8 Savile Row, London  W1S 3PE
to consider the Resolution, to be voted on by a poll of holders of Ordinary
Shares other than Best Investment, approving the extension of the waiver until
31 January 2005 is set out in the circular posted to Matrix Shareholders today.

Assuming that Best Investment converts all its Convertible Loan Stock and Peter
Dewe-Mathews converts none of his Convertible Loan Stock into Ordinary Shares,
Best Investment will be interested in 2,913,657 Ordinary Shares representing
approximately 60 per cent. of the then issued ordinary share capital.  Matrix
Shareholders should note that as Best Investment would then be interested in
more than 50 per cent. of the issued ordinary share capital and provided that
its shareholding remains more than 50 per cent., it would then be free to
acquire any number of Ordinary Shares without incurring a further obligation to
make a general offer for the Company.

For the reasons set out above, the Company cannot redeem the Convertible Loan
Stock on 31 January 2004.  The Board believes that it is therefore essential
that Matrix Shareholders vote in favour of the Resolution at the extraordinary
general meeting.  If the Resolution is not passed, the Board believes that the
Company will be unable to redeem the Convertible Loan Stock or meet its other
commitments as they fall due and may not be able to provide a return to
shareholders from the realisation of its assets.

Rupert Lywood, being the only director who is neither a holder nor associated
with a holder of Convertible Loan Stock, having been so advised by Durlacher
Limited, considers the extension of the waiver as proposed in the Resolution to
be fair and reasonable and in the best interests of the Company and shareholders
as a whole.  In providing advice to Rupert Lywood, Durlacher Limited has taken
into account Rupert Lywood's commercial assessment.  Accordingly, Rupert Lywood
recommends that Matrix Shareholders vote in favour of the Resolution as he
intends to do in respect of his 5,001 Ordinary Shares.  Best Investment will not
vote on the Resolution.


Enquiries:

Peter Dewe-Mathews
Chairman, Matrix Healthcare plc
01635 247400

Richard Swindells
Durlacher Limited
Nominated Adviser and broker to Matrix Healthcare plc
020 7459 3600


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