Medserv plc - Acquisition of Regis Holdings Limited

On 12 April 2021, Medserv plc announced that it has successfully concluded a conditional agreement for the acquisition of the core businesses of Regis Holdings Limited (“Regis”). The latter is a holding company whose subsidiaries provide logistics, equipment, procurement and specialised services to a wide range of customers, including national and international energy companies, drilling and mining companies as well as product and equipment manufacturers and other heavy industry-related contractors in South Africa, Mozambique, Uganda, Tanzania and Angola.

The agreement is subject to a number of conditions, namely:

  • the approval of the deal by the shareholders of Medserv;
  • the issuance of just under 47.9 million new Medserv shares in favour of the shareholders of Regis;
  • the change in name of Medserv to ‘MedservRegis plc’;
  • the delisting of Regis from the Stock Exchange of Mauritius;
  • the transfer out of Regis of its shareholding in a number of entities which do not form part of its core businesses;
  • the reorganisation of the shareholding structure of Regis so that Docob Limited will become the sole counterparty to the agreement with Medserv (Docob Limited is ultimately owned by Mr Dave O’Connor and Mr Olivier Bernard);
  • the receipt by the sellers of the Foreign Direct Investment Clearance; and
  • the execution of a loan agreement in the amount of USD6.68 million (and the provision of security) between Regis and one of its non-core subsidiaries.

The acquisition, which is expected to take place by 31 July 2021, will be pursued via the issuance of just under 47.9 million new Medserv shares at a price of €0.68 per share (equivalent to €32.6 million). The transaction will provide Medserv with market entry into critical growing markets and strengthen the company’s equity base and liquidity position. Moreover, the alliance brings together the complementary strengths of both Medserv and Regis and will allow them to successfully respond to the deep changes taking place in the energy market.

It is estimated that upon completion of the acquisition, the total consolidated assets of MedservRegis would amount to €170 million, of which circa €25 million would be in cash and cash equivalents (€16.6 million), investments held for re-sale (€3.6 million), and a non-operating asset that should be received in cash in the short to medium term (€5 million). Total liabilities are estimated to be just under €100 million which include around €23 million of lease liabilities. The equity of MedservRegis is forecasted to be approximately €70 million. Prospective financial information setting out the forecast consolidated statement of financial position as at the date of acquisition and the forecast statement of comprehensive income for the years ending 31 December 2021 and 2022 will be made available to Medserv shareholders in due course through the issuance of a shareholder circular.

Following the acquisition, the global outreach of MedservRegis would span across four continents, comprising a presence in twelve countries and operations out of ten bases. This is expected to strengthen the company’s market position and broaden its geographic footprint in strategic locations around the Mediterranean region (Libya, Malta, Cyprus and Egypt), the Middle East (United Arab Emirates, Oman and Iraq), Sub-Saharan Africa (Mozambique, Uganda, Angola and South Africa), and South America (Suriname).

Medserv also explained that the decision for the acquisition of Regis was taken by unanimous vote of the directors, with the exception of Mr Anthony S. Diacono and Mr Anthony J. Duncan who are the major shareholders of Medserv and who declared a conflict due to a private agreement reached with the shareholders of Regis. Mr Diacono and Mr Duncan agreed to sell part of their shares in Medserv to the shareholders of Regis (amounting to 1,470,588 shares and 1,450,000 shares respectively) and have also entered into a call option agreement with the shareholders of Regis whereby the latter have been given the right for three years to acquire additional shares in MedservRegis at a discounted price. In the event of an exercise of the call option, the current shareholders of Regis will become bound to launch a mandatory bid to all shareholders in MedservRegis in line with the provisions of Chapter 11 of the Listing Rules on Takeover Bids. The share transfer and call option agreements are conditional upon completion of the share purchase agreement between Medserv and Regis.

Medserv will be issuing a notice to its shareholders for the purpose of convening a general meeting to approve the acquisition and the issuance of almost 47.9 million new shares. In anticipation of the general meeting, Medserv will also issue a circular to shareholders including all information necessary in terms of the Listing Rules. The circular will provide shareholders with additional information on the proposed acquisition, including prospective financial information of Medserv plc for two financial periods ending 31 December 2021 and 31 December 2022 (assuming the acquisition by Medserv plc of Regis) and additional information on the organisational chart of the MedservRegis once the acquisition is concluded.

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