RCH richfield group limited

aquires aged care facilities

  1. 31,084 Posts.
    2 February 2005
    Ramsay Health Care announced today it has agreed to acquire five aged care facilities in
    Victoria from Ellis Residential Care for an outlay of $51 million.
    The facilities to be purchased include Bairnsdale Aged Care Facility, Lakeview Aged
    Care Facility (Lakes Entrance), Paynesville Aged Care Facility and Sale Aged Care
    Facility, which together have a total 331 high care and low care places. The acquisition of
    these four facilities also includes the acquisition of vacant land adjoining some of the
    facilities, which provides Ramsay Health Care with expansion opportunities.
    Ramsay Health Care has also entered into a separate agreement to purchase Gracedale
    Private Nursing Home from Ellis Residential Care. Gracedale has 75 extra service beds.
    Subject to appropriate approvals from the Department of Health and Ageing, settlement
    for Gracedale is expected in early March and for the other four facilities in early April.
    When the acquisition of the facilities is finalized, Ramsay Health Care will have 474
    operating aged care places.
    In addition, Ramsay Health Care has been granted a first and last right of refusal on the
    remaining five aged care facilities in the Ellis portfolio.
    Ramsay Health Care will fund the acquisitions using existing cash reserves and credit
    facilities. The funds raised in the institutional placement announced on December 2 were
    initially applied to debt reduction, strengthening the company’s debt capacity.
    Ramsay Health Care Managing Director Pat Grier said the acquisition of the five
    facilities is in line with the company’s strategy to expand into aged care through both
    acquisition and greenfields developments.
    “We are pleased to have reached agreement on this aged care acquisition that meets both
    our investment criteria and our objective to acquire quality aged care accommodation. In
    addition, the demographics fit our criteria to obtain accommodation bonds and convert to
    extra services,” Mr Grier said.
    “These are quality facilities which have benefited from recent capital investment. In
    addition, the land adjacent to the facilities provides us with potential to develop an
    integrated aged care campus, including independent living accommodation.
    “We expect the acquisition of these five facilities to have little financial impact in the
    current financial year and less then half a cent earnings per share dilution in financial
    year 2006, during the transition process. The acquisition is expected to be earnings per
    share positive in the second year, as the benefits of recent expansion materialize and
    further extra service status is achieved for a significant number of beds.
    “We now have a significant aged care presence from which to expand with bolt-on
    acquisitions and to complement our greenfields development plans,” Mr Grier said.
    Ramsay Health Care has previously announced that it has begun implementing its
    greenfields plan to build and develop between 500 and 600 aged care places over the next
    three years starting at sites in Brisbane and Coffs Harbour and it continues to investigate
    appropriate acquisition opportunities.
    Ramsay has secured and continues to apply for new licences in order to develop suitable
    facilities and where possible attract accommodation bonds.
    In addition to the aged care acquisitions, Ramsay Health Care has also entered into
    agreements to acquire two stand-alone hospital facilities – Murray Valley (30 beds) in
    Wodonga and Rockingham (45 beds) in Perth.
    Both of these hospitals are in close proximity to existing Ramsay Health Care facilities
    allowing for enhancement of service provision.
    Settlement for both hospital facilities is expected to occur this month.
    Mr Pat Grier Paula Hannaford
    Managing Director Director
    Ramsay Health Care Gavin Anderson & Company
    (02) 9433 3444 (02) 9552 4499 or 0413 940 180
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