MedservRegis plc - Shareholder Circular

On 20 May 2021, Medserv plc issued a Shareholder Circular in relation to the proposed acquisition of the core businesses of Regis Holdings Limited which will be part of the agenda for the forthcoming Annual General Meeting scheduled to be held on 11 June 2021.

The Shareholder Circular lists the main risk factors of the transaction and also provides further information about the conditional agreements between the two major shareholders of Medserv plc (namely Mr Anthony S. Diacono and Malampaya Investments Ltd) and Docob Limited (which is ultimately owned by Mr Dave O’Connor and Mr Olivier Bernard). The Shareholder Circular explains that in the case of a successful transaction, Docob Limited would have the option (for a period of three years) to acquire a further 1,167,182 shares from Mr Diacono, and a further 1,373,759 shares from Malampaya Investments Ltd, although the number of shares which are the subject to this call option may be reduced in certain circumstances. The exercise price for the acquisition of these shares is set at a 25% discount to the ‘Equitable Price’ as determined in accordance with the Listing Rules. Moreover, in case that the call option is exercised, Docob Limited will be bound to launch a mandatory offer to all shareholders of MedservRegis plc (including the two major shareholders – Mr Diacono and Malampaya Investments Ltd), in line with the provisions of Chapter 11 of the Listing Rules on takeover bids.

The Shareholder Circular also provides information about the expected effects on earnings, the financial position, and trading prospects of Medserv following the successful completion of the transaction. In this respect, Medserv plc noted that the deal will enable it to:

(i) present a full services logistics solution to its customers in the Sub-Saharan region whilst also allow it to participate in some significant upcoming logistics projects in Africa;

(ii) offer energy companies mill-to-well supply chain management services in new jurisdictions whilst also onboard new clients operating in other sectors with a view of reducing the overall exposure and reliance on the energy segment;

(iii) cross-sell in new countries as well as promote the services offered by Regis to markets currently serviced by Medserv plc;

(iv) increase Medserv’s geographical, product, and client spread, thus contributing to reducing the Group’s concentration risks as a result of increased diversification whilst also reducing the fluctuations in earnings and improve underlying profitability; and

(v) strengthen Medserv’s financial and equity base in support of its growth ambitions and targets.

In this context, the prospective financial information show that upon completion of the reverse acquisition, the total consolidated assets of MedservRegis would amount to €170 million of which €16.6 million would be in cash balances. Total liabilities are estimated to be €98.3 million which include €58.6 million in loans and borrowings and €23.9 million in lease liabilities. Total shareholders funds of MedservRegis is forecasted to be €71.7 million of which €31.4 million would be in retained earnings. As a result, following the successful conclusion of the transaction, MedservRegis is expected to have a gearing ratio of 53.5% compared to the level of almost 95% as at end of 2020 for Medserv plc on a standalone basis, whilst the leverage ratio (calculated as total assets divided by total equity) of the combined entity will be 2.4 times compared to 28.4 times for Medserv plc as at 31 December 2020.

In terms of the anticipated financial performance of MedservRegis, revenues are expected to amount to €44.6 million in 2021 (compared to €32.4 million in 2020 for Medserv plc on a standalone basis) which, in turn, would lead to an EBITDA of €10.7 million (Medserv plc – 2020: €5.57 million) and a net loss of €4.17 million (Medserv plc – 2020: net loss of €8.8 million). Furthermore, in 2022, revenues of MedservRegis plc are expected to climb to €66.2 million (+48.5%) which, in turn, would lead to an EBITDA of €18.3 million (+70.8%) and a net profit of €2.24 million. Accordingly, the projections show that the combined entity would have a net debt to EBITDA multiple of 3.6 times in 2022 (assuming an unchanged forecasted net debt position of €66 million as at 30 June 2021 and including lease liabilities of €23.9 million) compared to a multiple of 12.7 times for Medserv plc as at the end of 2020. Similarly, MedservRegis is anticipated to have an interest cover of 5.4 times in 2022 compared to 1.4 times for Medserv plc in 2020.


Medserv plc – Shareholder Circular dated 20 May 2021.