Offer for China Medstar Limited

    RNS Number : 9613V
  China Medstar Limited
  04 June 2008
   

    Not for release, publication or distribution, in whole or in part, in or into or from any jurisdiction (including the United States of
America, Canada, Australia, or Japan) where to do so would constitute a violation of the laws of such jurisdiction

    RECOMMENDED OFFER BY ASCENDIUM GROUP LIMITED  
    to acquire the entire issued share capital of 
    CHINA MEDSTAR LIMITED

    SUMMARY
    * The Boards of Ascendium Group Limited ("Ascendium") and China Medstar Limited ("Medstar" or the "Company") are pleased to announce
that they have reached agreement on the terms of a recommended Offer by Ascendium of the entire issued share capital of Medstar for 62 pence
per Share in cash.
    * The consideration of 62 pence in cash per Medstar Share values the existing total share capital of Medstar at approximately £17
million and represents a premium of approximately:
    96.8 per cent. to the Closing Price of 31.5 pence per Medstar Share on 1 May, 2008, the last Business Day immediately prior to the
announcement that the Company was in the final stages of agreeing an offer; and
    93.4 per cent. to the average price for one month to 1 May, 2008 of 32.1 pence per Medstar Share.
    * Ascendium is a limited liability company incorporated in the British Virgin Islands by its parent company, Concord Medical Services
Holding Limited, for the purposes of the Acquisition and to engage in making investments in the Chinese medical equipment market. The
business of Ascendium is to focus on investments in and management of medical equipment and medical centres which activities include
planning, installing and providing technical supporting services to such centres.
    * The Directors of Medstar, who have been so advised by Evolution, consider the terms of the Offer to be fair and reasonable and in the
best interests of the Medstar shareholders. In providing its advice, Evolution has taken into account the commercial assessments of the
Directors. Accordingly, the Directors unanimously recommend that Medstar Shareholders accept or procure acceptance of the Offer.
    * The Medstar Directors and certain other shareholders of Medstar have given irrevocable undertaking to Ascendium to accept the Offer of
their beneficial holdings of Medstar Shares which amount to 21,895,814 Ordinary Shares and represent 79.35 per cent. of the current issued
share capital of Medstar. 
    This summary should be read in conjunction with the full text of this announcement. Further information can be found in the Shareholder
Circular to be posted to Shareholders on 4 June, 2008.
      ENQUIRIES:

 China Medstar Limited
 Dr Cheng Zheng, Chairman and CEO                                      Tel: [phone]
 Yap Yaw Kong, CFO
 Evolution Securities Limited (NOMAD & financial adviser to Medstar)
 Tom Price                                                             Tel: [phone]
 Bobbie Hilliam                                                        
 Evolution Securities China
 Nick Martin                                                           Tel: [phone]
                                                                       

    Evolution Securities Limited is acting for Medstar in relation to the transactions described in this document and is not advising any
other person or treating any other person as its customer in relation to such transactions. Evolution Securities Limited will not be
responsible to any such person for providing the protections afforded to its customers or advising any such person on such transactions or
the contents of this document or any matters referred to herein.

    The Offer referred to in this document is not being made, directly or indirectly, in, into or by use of emails of, or by means or
instrumentality (including, with limitation, telephonically or electronically) of interstate or foreign commerce of, or any facilities of a
national securities exchange of, the Restricted Jurisdictions or any other jurisdiction if to do so would constitute a violation of the
relevant laws of such jurisdiction. This document does not constitute an offer in the Restricted Jurisdictions or any such other
jurisdiction and the Offer will not be capable of acceptance by any such use, means, instrumentality or facilities or otherwise from or
within the Restricted Jurisdictions or any such other jurisdiction. Accordingly, this document is being, nor should be, mailed, transmitted
or otherwise distributed, in whole or in part, in or into or from the Restricted Jurisdictions or any such other jurisdiction and persons
receiving such documents must not transmit or otherwise distribute, in whole or in part, in or into or from the United States, Canada, Australia, Japan or any such other jurisdiction. Doing so may render
invalid any purported acceptance of the Offer.

    It should be noted that the Articles of Medstar state that the provisions of the City Code and the Singapore Takeover Code do not apply
to Medstar but that the general principles of the same should be observed in relation to a transaction such as this.

      Not for release, publication or distribution, in whole or in part, in or into or from any jurisdiction (including the United States of
America, Canada, Australia, or Japan) where to do so would constitute a violation of the laws of such jurisdiction
    4 June, 2008
    RECOMMENDED OFFER BY ASCENDIUM GROUP LIMITED  
    to acquire the entire issued share capital of 
    CHINA MEDSTAR LIMITED
    1  Introduction
    The Boards of Ascendium Group Limited ("Ascendium") and China Medstar Limited ("Medstar" or the "Company") are pleased to announce that
they have reached agreement on the terms of a recommended Offer by Ascendium of the entire issued share capital of Medstar for 62 pence per
Share in cash.
    The consideration of 62 pence in cash for each Medstar Ordinary Share values the existing total share capital of Medstar at
approximately £17 million.
    2  Summary terms of the Offer
    Under the Offer, Ascendium is offering:
    62 pence in cash for each Offer Share
    The Offer values the entire issued share capital of Medstar at approximately £17 million. This represents a premium of approximately
96.8 per cent. to the Medstar closing price of 31.5 pence on 1, May 2008 (being the last business day immediately prior to the announcement
by Medstar that it was in discussions which may or may not lead to a recommended offer for Medstar) and approximately 93.4 per cent. to the
average price for one month to the same date of 32.1 pence per Medstar Share.
    To the extent that the Offer Price results in a Shareholder being entitled to a payment of a fraction of a penny, the payment will be
rounded down to the nearest whole penny. 
    The Offer Shares will be acquired fully paid and free from all Encumbrances and other interests and together with all rights now or
hereafter attaching thereto, including the right to receive all dividends and distributions declared, made or paid in the future.
    The Offeror believes that the most appropriate way of it acquiring the entire issued share capital of Medstar is by way of a general
offer to all Shareholders. The Articles state that the provisions of the City Code and the Singapore Takeover Code do not apply to Medstar
but that the general principles of the same should be observed in relation to such a transaction.
    Accordingly, Ascendium has entered into the Implementation Deed with Medstar whereby Ascendium has agreed to acquire the entire issued
share capital of the Company subject to the acceptance of the Offer by Medstar Shareholders representing no less than 75 per cent. of the
Medstar Shares to which the Offer relates (or such lower percentage as Ascendium may determine but being more than 50 per cent. of the
voting share capital of Medstar) and to the approval of the Resolutions at the Medstar EGM.
    The Offer is therefore conditional upon valid acceptances being received (and not, where permitted, withdrawn) in respect of the Offer
by no later than 1.00 p.m. (London time) on 26 June, 2008 in respect of 75 per cent. of the Medstar Shares (or such lower percentage as
Ascendium may determine but being more than 50 per cent. of the voting share capital of Medstar). The Offer is also conditional upon the
Resolutions being passed at the Medstar EGM.
    The Offer extends to all Medstar Shares unconditionally allotted of issued on the date of the Offer. If you are a Medstar Shareholder
and you do not accept the Offer you may become a minority shareholder in a subsidiary of Ascendium without a trading facility in your
Medstar Shares.
    However, if the Offer is accepted by Medstar Shareholders representing no less than 90 per cent. of the Shares to which the Offer
relates acceptance, the Offeror intends to implement the Compulsory Acquisition Procedure to acquire any remaining Offer Shares in respect
of which no executed Form of Acceptance has been received as soon as it is permitted to do so under the Companies Act.
    3  Background and reasons for recommending the Offer
    In arriving at their decision to recommend the Offer and the Resolution, the Directors have considered, amongst other things, the
following:
    * since the Company's initial flotation on AIM, the share price of the Ordinary Shares has fallen significantly. The poor performance of
the share price has reflected the disappointing financial performance of the Company. Further due to size of the Company, liquidity in the
Ordinary Shares has been limited since admission to AIM. The Directors believe the poor share price performance and the lack of liquidity in
the Ordinary Shares has disappointed Shareholders;
    * one of the primary reasons for the Company's admission to AIM was its intention to use the equity markets to finance continued growth.
However, further fundraisings have not been feasible due to the weakened valuation of the Ordinary Shares and consequently, the Company's
growth has been limited and where funding has been possible bank debt has had to be utilised increasing the gearing and risk profile of the
Company; and
    * the offer price represents a significant premium of approximately 96.8 per cent. to the Medstar closing price of 31.5 pence on 1 May,
2008 (being the last business day immediately prior to the announcement by Medstar that it was in discussions which may or may not lead to a
recommended offer for Medstar) and approximately 93.4 per cent. to the average price for one month to the same date of 32.1 pence per
Medstar Share.
    The Directors, having been advised by Evolution Securities, consider the terms of the Offer to be fair and reasonable and in the best
interests of the Medstar Shareholders. In providing this advice to the Directors, Evolution Securities have taken into account the
commercial assessment of the Directors.
    4    Irrevocable Undertakings
    Medstar Shareholders have given irrevocable undertakings to accept the Offer and to vote in favour of the Resolutions representing
approximately 79.35 per cent. of the current issued share capital of Medstar. 
    All of the Medstar Directors who hold Medstar Shares have irrevocably undertaken to accept or procure acceptance of the Offer of their
holdings and those of families or connected persons (within the meaning of section 7 of the Companies Act) totalling 12,537,972 Medstar
Shares, representing approximately 45.49 per cent. of the current issued share capital of Medstar.
      5   Medstar financial information and current trading
    As at the year end the Company had under management 17 diagnostic and treatment centres, two high intensity focused ultrasound ('HIFU')
centres and one Leksell Knife Centre. As at the date of this document, the Company currently operates 23 medical centres.
    As announced on 5 February, 2008, the financial results for 2007 are expected to be below the original expectations of the Medstar
Directors due to two major equipment sales budgeted for the end of 2007 not completing within the Trading Division and a dispute with a
leading hospital within the Cancer and Diagnostic and Treatment division.
    The Company remains highly seasonal with a large proportion of revenues and profits booked in the second half of the financial year.
        6  Financing the Offer
    The Offer will be financed from cash that Ascendium currently holds. Full acceptance of the Offer would result in a cash consideration
of £17,089,765.56 being payable by Ascendium to Medstar Shareholders. In addition, certain professional fees payable in connection with the
Offer will be paid from the cash resources of Ascendium following the Offer having become or declared unconditional in all respects and the
Medstar Shares for which the Offer has been accepted having been acquired by Ascendium. 
    On 30 May, 2008 Ascendium and Medstar entered into an escrow agreement with Reed Smith Richards Butler LLP whereby the full amount
payable in respect of the Cash Consideration (including a break fee payable to Medstar by Ascendium under certain circumstances pursuant to
the Implementation Deed) and certain other professional fees and costs has been deposited with Barclays Bank in London on terms such that it
will be made available to meet the Offer should it be declared unconditional in all respects. 
    The Medstar Board is satisfied that Ascendium has sufficient resources available to it to satisfy the Cash Consideration payable under
the Offer as a result of full acceptance of the Offer by all the Medstar Shareholders.
    7  Cancellation of listing, conversion and compulsory acquisition
    The Offer is conditional upon the Offeror receiving valid acceptance in respect of not less than 75 per cent. (or such lower percentage
as Ascendium may determine but being more than 50 per cent. of the voting share capital of Medstar) of the Offer Shares and upon the Medstar
Shareholders approving the Resolutions at the Medstar EGM to cancel the listing on AIM and to convert the Company to a private limited
company.
    Subject to the Offeror receiving valid acceptance in respect of not less than 75 per cent. under the AIM Rules for Companies, the
Cancellation can take effect the Business Day following the Offer. Assuming that more than 75 per cent. of Shareholders accept the Offer and
the Resolutions are passed by not less than 75 per cent. of the Shareholders, it is proposed that the Cancellation will take place on or
around 7 July, 2008.
    8  Recommendation
    The Directors, having been advised by Evolution Securities, consider the terms of the Offer to be fair and reasonable and in the best
interests of the Medstar Shareholders. In providing this advice to the Directors, Evolution Securities have taken into account the
commercial assessment of the Directors. 
    Accordingly, the Directors unanimously recommend that Medstar Shareholders accept the Offer, as they themselves have irrevocably
undertaken to do in respect of their own shareholdings comprising, in aggregate, 12,537,972 Ordinary Shares representing 45.49 per cent. of
the Offer Shares. 
    The Directors also recommend that shareholders vote in favour of the Resolutions as they intend to do in respect of their own beneficial
holdings amounting to 12,537,972 Shares, representing 45.49 per cent. of the Company's Ordinary Shares. 
    Evolution Securities is advising the Directors in relation to the Offer and is not acting for any member of the Board of Medstar in
their personal capacities nor for any Medstar Shareholders in relation to the Offer. Evolution Securities will not be responsible to any
such person for providing the protections afforded to its clients or advising any such person in relation to the Offer. In particular,
Evolution Securities will not owe any duty to any particular Medstar Shareholders concerning the Offer. 
    If you are in any doubt as to what action you should take, you are recommended to seek your own personal financial advice from your
stockbroker, bank manager, solicitor, accountant or other independent professional adviser authorised under the UK Financial Services and
Markets Act 2000 if you are a UK resident shareholder or, if not, from another appropriately authorised financial adviser in your respective
jurisdictions.
    9  Timetable
    The expected timetable of principle events is as follows:
    Latest time and date for receipt of Forms of Proxy for the     10.00 a.m. (Beijing time) on 25 June, 2008
    EGM
    Closing Date under the Offer                                                     1.00 p.m. (London time) on 26 June, 2008
    Medstar Extraordinary General Meeting                                  10.00 a.m. (Beijing time) on 27 June, 2008
    Proposed Date of Cancellation                                                 8.00 a.m. (London time) on 7 July, 2008

    Words and expressions in this announcement have the same meaning as those defined in the Shareholder Circular dated 4 June 2008 except
where the context requires otherwise.

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