Promisia Integrative announces new business direction
19 December 2019
NZX-listed Promisia Integrative (NZX:PIL) announced today it will be taking a completely new direction in place of its joint health dietary supplement business.
Chairman Stephen Underwood says the company plans to become an aged care business and has entered a conditional agreement to acquire three aged care facilities for $31.3 m, and to lease a fourth with an option to buy.
"The regulatory difficulties Promisia has faced in relation to Arthrem over the past eighteen months have severely affected sales and jeopardised our ability to operate. In response, the Board explored other opportunities to leverage Promisia's NZX listing and introduce a profitable business that is robust and scalable. The intention is to build a profitable, sustainable aged care business," he says.
The Board believes that a move into the aged care sector will provide Promisia with stable cash flows, sustainable profits, and growth through new developments and acquisitions.
As a result, Promisia has moved to acquire Ranfurly Manor and Nelson Residential Care Centre in Feilding and Eileen Mary Residential Care Centre in Dannevirke. These facilities are fully operational and profitable with consolidated March FY19 revenue of $12.7 million and EBITDA of $2.4 million.
Promisia will also acquire a long-term lease of Aldwins House in central Christchurch. The building operated as an aged care facility but was damaged severely in the Christchurch earthquake. It has been strengthened and refurbished and is intended to reopen in 2020 as a 147-bed rest home/hospital. An option to purchase the property is included in the acquisition.
"The board is excited about the growth potential of our new direction and believe it offers a compelling opportunity for shareholders," says Mr Underwood.
Promisia is at an advanced stage of preparing a notice of meeting and listing profile for the transaction. In addition, Simmons Corporate Finance Limited has been appointed to prepare an independent report for the transaction under the Listing Rules and the Takeovers Code. These documents are expected to be submitted to regulators by Christmas with a view to being put to shareholders in early February.
In accordance with NZX practice in reverse listing transactions, Promisia shares will be suspended on the NZX market from today until all shareholder documentation has been released and the market can be informed on all facets of the transaction.
Subject to NZX and shareholder approvals, completion is expected in first quarter of 2020.
Chief Executive Rene de Wit will continue in his role and operational management of all the facilities will remain under the management of General Manager Virginia Dyall-Kalidas.