Metlifecare reduces merger sweetener for Vision shareholders

BUSINESSDESK: Metlifecare, the rest home operator that raised $45.5 million of new capital last year, has scaled back its offer to Vision Senior Living shareholders as part of merger that will deliver eight new retirement villages.

VSL's private equity shareholders Goldman Sachs and Arrow International will receive 13m shares on settlement of the deal, down from 21m previously.

If the average share price meets a $3 target within 28 months of the deal, VSL's investors stand to get an extra 7m shares.

All of those shares will be held in escrow for 16 months, rather than six months for the private equity funds and 12 months for Arrow.

Private Life Care Holdings, which is pushing three villages into the merged entity, will receive 29.7m shares as a result of the variation, down from 30.5m initially flagged, and its shareholders will sell between 16.5m and 22.5m shares on settlement of the deal.

PLC is owned by Metlifecare's biggest shareholder, Retirement Village Group.

"We have worked hard to agree variations with the vendors of Vision and PLC following the feedback from our shareholders, and believe the revised terms align the interests of all our shareholders post the merger," independent director Brent Harman said.

The merger will boost Metlifecare's portfolio to 24 villages, three of which are in development.

The number of units will increase to 3902 from 2460, while brownfield and greenfield capacity climbs to 1011 units from 380 units.

Metlifecare will also raise $10m of additional capital from third party investors, rather than from VSL shareholders as previously flagged. The funds will be used to pay down debt.

The deal is still valued at $216m on a net tangible asset basis, with $83m attributed to VSL, $123m to PLC and $10m of new capital.

Metlifecare expects to add an extra $23.2m in operating cash flow, or 7 cents per share, in the 2013 financial year.

Operating cashflow after funding is forecast to be $52.7m in 2013, from a predicted pre-merger $26.5m in 2012, and $22.5m in 2011.

The shares rose 1% to $2.05 on Friday, and have shed 9.7% this year.