Abano gains NZX waiver over sale of half stake in Bay International; deal unconditional

Abano Healthcare Group's [NZX: ABA] sale of its 50% stake in Bay International has been declared unconditional after the NZX granted a waiver that meant the deal doesn't need to go to a shareholder vote.

The healthcare investor has agreed to sell the stake in Bay International to interests associated with Peter Hutson for $32 million, almost three times book value. It will generate a surplus of about $20 million once Abano's $A1.8 million share of Bay Audio Australia's deferred tax asset was recognised, it said this week.

The proceeds will be included in the company's 2016 results. As part of the transaction, Abano will assign its $20.5 million of shareholder loans with Bay International to the Hutsons.

Bay International owns Bay Audio, an audiology retail network in Australia with a smaller footprint in Southeast Asia. Because Hutson is a related party, a waiver was needed to "enable settlement to be achieved on a timely and cost-effective basis," Abano chairman Trevor Janes said in a statement.

"As the price was set by an independent third party and was acceptable to the Abano board, we determined that the earlier settlement terms provided for under the shareholders' agreement were preferable to the process of proceeding through a shareholder meeting," Mr Janes said. "We are confident shareholders will support this decision."

The sale comes after Abano last month got an unsolicited approach from an international hearing device manufacturer to buy Bay International, which triggered Hutson's pre-emptive rights under Bay's shareholder agreement. The manufacturer hasn't been identified.

In approving the waiver, the NZX noted that the manufacturer had assured Abano that "it had no discussions with Mr Hutson prior to providing ABA with the preliminary non-binding offer, and that there were no arrangements between the bidder and Mr Hutson or the Hutson Trustees."

The ultimate ownership of Bay International will also change as long-time silent partner Scott Wright, via the Scott and Alison Wright Family Trust, will exit his 11%  holding in the audiology business in a series of transactions that involve another Abano shareholder, James Reeves.

Mr Reeves' Steamboat Capital teamed up with Mr Hutson and Archer Capital in 2013 for what was a hostile and unsuccessful takeover proposal for Abano. At the time, the Abano board asked Mr Hutson to resign as a director, which he did in September 2013.

Proceeds from the Bay sale will be used to repay debt and help fund Abano's continued expansion of its Lumino The Dentists network in New Zealand and Maven Dental Group in Australia, Abano said this week.

Abano shares last traded at $7.75 and have edged up 1.6% in the past 12 months.

(BusinessDesk)