$10m boost for Abano investors

Listed health and medical investor and operator Abano Healthcare will return $10 million to shareholders by way of a share buyback.

The cash payment is conditional on several factors including Abano settling its $63.5 million sale of its ElderCare aged care business to Australian investment and banking giant Macquarie.

ElderCare has 13 residential care facilities, accounting for 2.4 per cent of the national market.

Abano, which has 27.7 million shares on issue and was formerly called ElderCare NZ, has wanted to quit aged care for some time and last year appointed investment bank Clavell Capital to review its operations.

Abano managing director Alan Clarke said yesterday the share buyback was subject to Inland Revenue approval and to minimum threshold shareholder acceptances.

Alison Paterson, an independent Abano director, said the deal should be completed by August.

"The board proposes that a return of capital of $10 million will be made by way of an off-market pro-rata voluntary share buyback," she said.

Abano chief financial officer Richard Keys said a special meeting was planned for July 6 to seek shareholder approval.

Once the ElderCare sale was completed, it would have no debt, $29 million cash and $40 million revenue.

"This still leaves the group with sufficient capacity to pursue opportunities that offer higher returns and are less capital-intensive than the aged care sector," Keys said.

Lately, the company has been involved in:

* Buying 40 per cent of Ascot Radiology in February, with the option for another 40 per cent by May 2007.

* Buying the Auckland Dental Group and two other dental practices in February.

* Launching its dental network, Lumino, to replace the Geddes Dental Group, bought in February 2003.

* Announcing conditional deals to buy dental practices in Hamilton and Te Awamutu this month.

* Holding discussions with Sonic Healthcare this month on the potential of merging Abano's diagnostics laboratory in Wellington with Sonic's Hutt Valley practice.

Abano's three major shareholders are Cullen Investments with 17.8 per cent, Rotorua Energy Charitable Trust with 14.2 per cent and AXA Asia Pacific Holdings with 9.2 per cent. Abano shares were steady at $1.70 yesterday.

Last month, it reported a poor six-monthly result. Although it had revenue of more than $30 million, 1300 staff and 43 facilities, it struggles to make a profit in the normally profitable healthcare sector.

Its six months to last November 30 showed a net profit of just $45,000, down 86 per cent on the previous corresponding period.

In care

* Once the ElderCare sale is complete, Abano will have no debt, $29 million cash and $40 million revenue.

* It plans to pursue several opportunities offering higher returns.