Watchstone Group PLC Sale of Healthcare Services (5255M)

TIDMWTG

RNS Number : 5255M

Watchstone Group PLC

17 September 2019

The information contained within this announcement is deemed to constitute inside information as

stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this

announcement, this inside information is now considered to be in the public domain.

Watchstone Group plc

("Watchstone" or the "Company" or the "Group")

Sale of PT Healthcare Solutions Corp. and other subsidiaries forming its Healthcare services business

Watchstone Group plc (LON:WTG) announces that its Canadian subsidiary, Quindell Services Inc. ("QSI") has agreed to sell its wholly owned subsidiary PT Healthcare Solutions Corp. ("ptHealth") and other subsidiaries forming its Canadian Healthcare services business ("Healthcare Services") for an initial cash consideration of Canadian $36.2m (GBP22.3m ) on a cash and debt free basis to 11628542 Canada Inc. a wholly owned subsidiary of LM Holdings Corp. (collectively "LMH") ("the Sale").

In addition, QSI will be due up to a further C$0.8m (GBP0.5m) conditional on the business generating target revenues in the first year after its acquisition by LMH. Typical commercial warranties have been given to LMH and the Group's liability under those warranties is subject to customary limitations. The completion of the transaction is subject to limited conditions, including receipt of certain change of control consents. Subject to satisfaction of the conditions precedent, the Sale is scheduled to complete on 30 September 2019 with a long stop completion date of 29 November 2019. Watchstone is a guarantor to the agreement, guaranteeing performance of QSI's obligations.

Healthcare Services comprises ptHealth and Innocare. ptHealth is a national healthcare company that owns and operates physical rehabilitation clinics across Canada. From large cities to small communities, ptHealth delivers quality services in a compassionate and patient-centred atmosphere that is focused on providing recovery solutions for its patients.

As announced in the interim results on 4 September 2019, the trading results of the Healthcare Services business have been largely flat year on year with a marginal increase in revenues to C$26.3m in H1 2019 compared to C$26.1m in H1 2018.

As at 30 June 2019, the net assets of Healthcare Services totalled C$18.1m (GBP10.9m), including outstanding preference shares of C$5.2m (GBP3.1m). The preference shares will be settled in full on closing out of the gross proceeds of the Sale. EBITDA for the six months ended 30 June 2019 was C$2.5m (GBP1.4m). As at 31 December 2018, the net assets of Healthcare Services were C$17.1m (GBP9.9m), net of preference shares, and EBITDA for the year ended 31 December 2018 was C$1.5m (GBP0.9m). EBITDA for the year ended 31 December 2018 was stated prior to the adoption of IFRS 16 in respect of Leases.

The Directors, who have been advised by National Bank Financial Inc. of Canada, consider the terms of the Sale to be fair and reasonable. The Directors consider the Sale to be in the best interests of the Group's shareholders and other stakeholders and to be consistent with the Group's previously stated objective to prepare our businesses for future disposal and to divest at the optimal time.

The net cash proceeds of the Sale after settlement of costs and the remaining outstanding ptHealth Preference Shares (totalling approximately C$3.9m (GBP2.3m) as at 31 August 2019) will be kept on deposit and managed prudently until a distribution to shareholders can be effected. As previously announced, no distribution of capital will be made to shareholders of Watchstone until the Slater & Gordon litigation has been resolved.

For further information:

 
 Watchstone Group plc                               Tel: [phone] 
  Alex Nekrassov 
  [e-mail] 
 WH Ireland Limited, Nominated Adviser and broker       Tel: [phone] 
  Chris Hardie                                                   1666 
  Lydia Zychowska 
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September 17, 2019 02:01 ET (06:01 GMT)