Offer for Matrix Healthcare

RNS Number:3613U
Jeremy Davies & Richard Ellert
19 January 2004

19 January 2004



Not for release, distribution or publication in or into the United States,
Canada, Australia or Japan.



Mandatory Cash Offer

                         By Nabarro Wells & Co. Limited

                On behalf of the Davies and Ellert Concert Party

                           For Matrix Healthcare plc



Introduction



Jeremy Davies and Richard Ellert announce that they have acquired 2,727,272
Existing Matrix Ordinary Shares at 40p per share, representing approximately
54.4 per cent. of Matrix's Share Capital. The Matrix Ordinary Shares purchased
by the Davies and Ellert Concert Party result from the conversion today by Best
Investment Limited and Peter Dewe-Mathews of their holdings of #850,000 and
#50,000 Matrix Convertible Loan Stock into 2,575,757 and 151,515 Existing Matrix
Ordinary Shares respectively.



As a result of the acquisition of the Matrix Ordinary Shares the Davies and
Ellert Concert Party are required to make a mandatory cash offer to acquire all
the Matrix Ordinary Shares not owned by them at a price of 40p each. In
addition, the acquisition of the Initial Consideration Shares arising from
Matrix's acquisition of Newsham and Woodland triggers a further obligation on
the Davies and Ellert Concert Party pursuant to Rule 32 of the Code to make a
mandatory cash offer to acquire all the Matrix Ordinary Shares not owned by them
at a price of 40p each. This further obligation pursuant to Rule 32 is to be
satisfied by the extension of the Offer for a period of 14 days from the date of
completion of the Acquisitions.



The Offer



On behalf of the Davies and Ellert Concert Party, Nabarro Wells & Co. Limited ("
Nabarro Wells") will offer to acquire, on the terms set out in this
announcement, all of the Matrix Ordinary Shares not already owned by the Davies
and Ellert Concert Party on the following basis:



              for each Matrix Ordinary Share           40p in cash



Based on the cash value of 40p for each Matrix Ordinary Share, the Offer values
the Share Capital of Matrix at approximately #2.0 million. The Offer represents
a premium of 73.9 per cent. over the closing middle market quotation of 23p for
each Matrix Ordinary Share (as derived from the AIM Appendix to the Daily
Official List) on 16 January 2004, being the closing price for Matrix Ordinary
Shares on the last dealing day prior to the announcement of the Offer by the
Davies and Ellert Concert Party. No offer will be made for the Matrix Deferred
Shares as they are effectively worthless.



The Matrix Ordinary Shares to be acquired pursuant to the Offer are to be
acquired credited as fully paid and free from all liens, equities, charges,
encumbrances and other interests and together with all rights attaching thereto,
including the right to receive and retain all dividends and other distributions
declared, made or paid thereafter.



Further terms of the Offer will be set out in Appendix I to the Offer Document.



Background to and reasons for the Offer



In the statement accompanying the interim results for the six months ended 31
March 2003, Peter Dewe-Mathews 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 Limited'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 of 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 shareholders within the Enlarged Group.



The Board believes that the Offer and the Proposals are in the best interests of
Matrix Shareholders. 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 Matrix Ordinary Share
for the remainder of the Share Capital that they do not already own, both as a
result of their purchase of more than 30 per cent of Matrix's Share Capital from
Best Investment Limited and Peter Dewe-Mathews and as a result of their
subsequent acquisition of Initial Consideration Shares. This will give Matrix
Shareholders the opportunity to sell were estimated to amount to around 40p per
Matrix Ordinary Share, This will 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 Limited and Peter
Dewe-Mathews for 2,727,272 Existing Matrix Ordinary Shares. Best Investment
Limited is a company controlled by John Spiers, a Director of Matrix. 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 facility and a growth strategy.



Information on the Davies and Ellert Concert Party



Jeremy Davies and Richard Ellert had been involved in healthcare for many years.
In May 1993, they founded NHP Plc, the UK's only listed property investment
group specialising in the purchase and leaseback of care homes, being Estates
Director and Chief Executive respectively. Between February 1995 and September
2000, under their direction, NHP acquired 379 care homes, with 19,002 beds,
leased to 25 tenants, at a cost of #670 million funded by four issues of shares
listed on the London Stock Exchange, totalling #173 million, and #559 million
securitised debt listed on the Luxembourg Stock Exchange. Richard Ellert
resigned from NHP in August 2000 and Jeremy Davies resigned in November
2001.Since their departure from NHP they have been looking for other
opportunities in the healthcare industry.



Jeremy Davies and others have today conditionally sold Newsham House Limited and
Woodland Healthcare Limited, two care homes operators, to Matrix. Jeremy Davies
owns 70 per cent. of the share capital of Newsham and Jeremy Davies and Pearl
Jackson each own 33 per cent. of the share capital of Woodland.



Management and employees



The Davies and Ellert Concert Party has confirmed that the existing employment
rights, including pension rights, if any, of the management and employees of
Matrix will be fully safeguarded. At the Company's Annual General Meeting Peter
Dewe-Mathews shall become Non-Executive Chairman of the Company, Rupert Lywood
and John Spiers will resign as Directors and Jeremy Davies, Richard Ellert and
Pearl Jackson, who currently acts as a consultant to Matrix and Woodland, will
be proposed for election to the Board as Managing Director, Finance Director and
Operations Director respectively.



Financial effects of acceptance of the Offer



The following table sets out, for illustrative purposes only and on the bases
and assumptions set out below, the financial effects of acceptance of the Offer
on capital value for a holder of 100 Matrix Ordinary Shares. No illustration is
made of the financial effect of acceptance of the Offer on gross income for a
holder of Matrix Ordinary Shares as Matrix has not declared a dividend in their
most recent audited financial periods.



Offer


                                                                  #

Capital value

Cash value for 100 Matrix Ordinary Shares                    40.00

Market value of 100 Matrix Ordinary Shares (a)               23.00

Increase in capital value                                   17.00

This represents an effective increase of approximately      73.9%



(a) Based on the closing middle-market price, as derived from the AIM Appendix
to the Daily Official List, of 23p per Matrix Ordinary Share on 16 January 2004,
the last dealing day before the announcement of the Offer.

(b) No account has been taken of any liability (actual or potential) to taxation
under the Offer.



Nabarro Wells, acting as financial advisers to the Davies and Ellert Concert
Party confirm that sufficient cash resources are available to the Davies and
Ellert Concert Party to satisfy full acceptance of the Offer.



Directors' opinion on the Offer



The Matrix Directors, who have been so advised by Durlacher, believe that there
are two courses of action that Matrix Shareholders can take, either to accept or
reject the Offer. Each Matrix Shareholder's decision will depend on his/her
commercial assessment of the Enlarged Group, his/her desire for cash now and his
/her taxation and other circumstances. The Directors recommend Matrix
Shareholders to consult their duly authorised financial adviser before they
decide whether or not to accept the Offer. Matrix Shareholders should consider
the following factors before making their decision:



(a)        Having regard to the Acquisitions and factors set out in this
announcement, the Offer Document and the Circular which is being despatched
today to Matrix Shareholders relating to the Enlarged Group's on-going business,
growth strategy and new executive management team, a Matrix Shareholder may take
the view that there may be value in following the Enlarged Group's strategy and
retaining their Matrix Ordinary Shares. With 10 care homes, the Enlarged Group
will have considerably more critical mass than the existing business of Matrix.
In addition, with #9.75 million of banking facilities on Admission and the new
executive management team, the Enlarged Group may therefore be better placed to
enhance shareholder value than the existing Matrix business. A Matrix
Shareholder who accepts these arguments is advised by the Directors to reject
the Offer and remain a Matrix Shareholder. A Matrix Shareholder who rejects the
Offer should bear in mind the risk factors set out in Part II of the Circular.



(b)        A Matrix Shareholder who does not accept the Enlarged Group's
strategy to enhance or create shareholder value or who simply wishes to take 40p
per Matrix Ordinary Share in cash now is advised by the Directors to accept the
Offer of 40p per Matrix Ordinary Share in cash because they believe the terms of
the Offer to be fair and reasonable. A Matrix Shareholder who wishes to accept
the Offer and who invested in Matrix Ordinary Shares through the Business
Expansion Scheme and/or the Enterprise Investment Scheme is strongly advised to
seek advice on his/her personal taxation position from a suitably qualified
professional under the Financial Services and Markets Act 2000.



In providing advice to the Company on the Offer and the Acquisitions, Durlacher
has taken into consideration the Directors' commercial assessment of the
business and the Acquisitions.



Because the Davies and Ellert Concert Party now control the Company, the Offer
will be unconditional. As a result of the acquisition of the Matrix Ordinary
Shares by the Davies and Ellert Concert Party, the Offer will be open until 12
February 2004 and as a result of the acquisition of the Initial Consideration
Shares, pursuant to Rule 32 of the Code, the Offer will be extended from the
date of completion of the Acquisitions until 26 February 2004, beyond which date
the Offer will not be extended. The Davies and Ellert Concert Party intend to
maintain the AIM quotation for Matrix Ordinary Shares.



Immediately following the closing of the Offer and following completion of the
Acquisitions, Jeremy Davies will own 3,789,772 Matrix Ordinary Shares (42.6%),
Richard Ellert will own 1,250,000 Matrix Ordinary Shares (14.1%), who together
with Pearl Jackson who will own 1,000,000 Matrix Ordinary Shares (11.3%), in
aggregate 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 Directors and Best Investment Limited have undertaken not to accept the
Offer in respect of their entire beneficial share holdings amounting to 432,901
Matrix Ordinary Shares in aggregate representing approximately 8.6 per cent. of
the Existing Matrix Ordinary Shares. Matrix Shareholders should note that this
means that the Davies and Ellert Concert Party will not become entitled or
obliged to acquire compulsorily Matrix Ordinary Shares from Matrix Shareholders
who do not accept the Offer and so any Matrix Shareholder who wishes to accept
the Offer must do so before 3.00 p.m. on 26 February 2004.



General



The Offer Document and the Form of Acceptance are being posted today.



Press enquiries

David Rydell, Bell Pottinger 020 7861 3232


Save as disclosed above and for 8,000 Matrix Ordinary Shares held by a director
of Nabarro Wells, neither the Davies and Ellert Concert Party nor any person
acting in concert with it owns or controls any Matrix Ordinary Shares or any
securities convertible or exchangeable into, or any rights to subscribe for or
purchase, or holds any options to purchase Matrix Ordinary Shares or holds any
derivatives referred to securities of Matrix. The appendix to the Offer Document
contains definitions of certain terms used in this announcement.



Nabarro Wells, which is regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for the Davies and Ellert Concert
Party in connection with the Offer and will not be responsible to anyone other
than Jeremy Davies and Richard Ellert for providing the protections afforded to
customers of Nabarro Wells, or for giving advice in relation to the Offer or the
contents of this announcement. No representation or warranty, express or
implied, is made by Nabarro Wells as to any of the contents of this
announcement.



Durlacher, which is regulated in the United Kingdom by the Financial Services
Authority, is acting exclusively for Matrix in connection with the Offer and
will not be responsible to anyone other than Matrix for providing the
protections afforded to customers of Durlacher or for giving advice in relation
to the Offer or the contents of this document. No representation or warranty,
express or implied, is made by Durlacher as to any of the contents of this
announcement.



Jeremy Davies and Richard Ellert accept responsibility for the information
contained in this announcement other than the information relating solely to
Matrix, the Matrix Directors, their immediate families, related trusts and
persons connected with the Matrix Directors and for the views and opinions as
set out in the announcement from the Chairman of Matrix. To the best of the
knowledge and belief of Jeremy Davies and Richard Ellert (who have taken all
reasonable care to ensure such is the case), the information contained in this
announcement for which they accept responsibility is in accordance with the
facts and does not omit anything likely to affect the import of such
information.

The Directors of Matrix Healthcare plc accept responsibility for the information
contained in this announcement relating to Matrix (other than the information
relating solely to Jeremy Davies and Richard Ellert and Pearl Jackson and their
activities), the Matrix Directors, their immediate families, related trusts and
persons connected with the Matrix Directors and for the views and opinions as
set out in the announcement from the Chairman of Matrix. To the best of the
knowledge and belief of the Directors (who have taken all reasonable care to
ensure such is the case), the information contained in this announcement for
which they accept responsibility is in accordance with the facts and does not
omit anything likely to affect the import of such information.

Unless otherwise determined by the Davies and Ellert Concert Party, the Offer
will not be made, directly or indirectly, in or into, or by use of the mails of,
or by any means or instrumentality (including, without limitation, electronic
mail, facsimile transmission, telex or telephone) or interstate or foreign
commerce of, or any facilities of a national securities exchange of, the USA, or
in or into Canada, Australia or Japan, and, subject to certain exceptions, the
Offer will not be capable of acceptance by any such use, means or
instrumentality or facilities or from or within the USA, Canada, Australia or
Japan. Any person (including, without limitation, nominees, trustees or
custodians) who are overseas persons or who would, or otherwise intend to,
forward this document or the Offer Document, or Form of Acceptance or any
related document to any jurisdiction outside the United Kingdom or to overseas
persons should seek appropriate advice before taking any action.

This announcement has been issued by the Davies and Ellert Concert Party and
approved by Nabarro Wells for the purpose of section 21 of the Financial
Services and Markets Act 2000. The principal place of business of Nabarro Wells
is Saddlers House Gutter Lane, London EC2V 6HS.


Appendix



                                  Definitions



The following definitions apply throughout this document, unless the context
requires otherwise:


"Acquisition Agreements"       the Newsham Acquisition and the Woodland Acquisition

"Board" or "Directors"         the directors of the Company, whose names are Peter Dewe-Mathews,
                               John Spiers and Rupert Lywood

"Circular"                     the circular dated 19 January 2004 and issued by the Company in
                               accordance with the AIM Rules and the Regulations

"City Code" or "Code"          the City Code on Takeovers and Mergers

"Company", "Matrix" or "Matrix Matrix Healthcare plc
Healthcare"

"Completion"                   completion of the Acquisition Agreements in accordance with their
                               terms

"Davies and Ellert Concert     William Jeremy Davies and Richard John Ellert
Party"

"Durlacher"                    Durlacher Limited

"Enlarged Group"               the Company, Newsham, Woodland and their subsidiaries

"Enlarged Share Capital"       the entire issued ordinary share capital of the Company following
                               the issue of the Initial Consideration Shares

"Existing Matrix Ordinary      the 5,010,694 Matrix Ordinary Shares in issue at the date of this
Shares"                        document

"Form of Acceptance"           the form of acceptance and authority accompanying this document

"Initial Consideration Shares" the 3,875,000 new Matrix Ordinary Shares to be allotted and issued,
                               credited as fully paid, pursuant to the Acquisition Agreement on
                               Admission

"London Stock Exchange"        London Stock Exchange plc

"Matrix Convertible Loan Stock the #900,000 10 per cent secured convertible redeemable loan notes
"                              2004 issued by the Company, which were converted into 2,727,272
                               Matrix Ordinary Shares on 19 January 2004

"Matrix Deferred Shares"       deferred shares of 5p each in the capital of the Company

"Matrix Ordinary Shares        the existing issued or unconditionally allotted and fully paid (or
                               credited as fully paid) ordinary shares of 5p each in the capital
                               of Matrix and any further such shares which are issued or
                               unconditionally allotted on or prior to the date on which the Offer
                               closes or, subject to the provisions of the City Code, such earlier
                               date or dates as the Davies and Ellert Concert Party may determine

"Matrix Shareholders"          the holders of Matrix Ordinary Shares

"Nabarro Wells"                Nabarro Wells & Co. Limited

"Newsham"                      Newsham House Limited, registered in England and Wales under
                               company number 02719425

"Offer"                        the mandatory cash offer made by Nabarro Wells on behalf of the
                               Davies and Ellert Concert Party to acquire the Matrix Ordinary
                               Shares not already owned by the Davies and Ellert Concert Party

"Panel"                        The Panel on Takeovers and Mergers

"Regulations"                  the Public offers of Securities Regulations 1995 (as amended)

"Share Capital"                the entire issued ordinary share capital of the Company

"Woodland"                     Woodland Healthcare Limited, registered in England and Wales under
                               company number 2912772






                      This information is provided by RNS
            The company news service from the London Stock Exchange
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