Healthcare Enterprise Group PLC (AIM: HCEG, “the Company” or “HCEG”), the international healthcare products group, announces that it has, subject to relevant shareholder approval, today agreed terms which would entitle holders of the £250,000 unsecured loan stock announced and placed on Friday 1 February (“Unsecured Loan Stock”) to convert their Unsecured Loan Stock into new HCEG ordinary shares (“New Ordinary Shares”). One of the investors who is subscribing for £125,000 of Unsecured Loan Stock is Ludgate Investments Limited (“Ludgate”), who is a related party by virtue of the fact that John Gunn is deputy chairman of Ludgate and a Director of HCEG, and the other holder of Unsecured Loan Stock is Nigel Wray, who until April 2007 was a director of HCEG and, therefore, also a related party. 

 

The £250,000 Unsecured Loan Stock comprises the balance of the £1,750,000 Loan Stock announced on 26 October 2007, and is being issued on substantially the same terms (including rights and conversion terms) as the initial £1,500,000 that was placed in October 2007 (the “October Placing”). However, the convertibility of the Unsecured Loan Stock is also subject to the prior placing of a minimum of 30,000,000 Ordinary Shares or such other number of Ordinary Shares as may be required to be issued so that upon conversion of any or all of the Unsecured Loan Stock the aggregate number of voting shares in the Company held by John Gunn, Nigel Wray, Ludgate and their respective associates and concert parties would represent not more than 29.9 per cent. of the issued voting shares of the Company.

 

These terms are summarised below:

 

a.      The £250,000 Unsecured Loan Stock will earn interest of 8% per annum and has a final repayment date of 5 November 2012. The Company has committed to propose the necessary facilitating resolutions to shareholders at a general meeting to be called shortly, to permit such Loan Stock to be convertible into up to 20 million New Ordinary Shares in the Company at a conversion price of 1.25p each, should the holders elect to do so.

 

b.      Options have been granted to the holders of the Unsecured Loan Stock for an aggregate exercise price of up to £214,285 in cash over up to 6.43% of the equity in the Company's wholly owned subsidiary, Ebiox Limited (“Ebiox”). This implies a valuation of Ebiox of £3.3million. Ebiox produces a range of patented cleansing, decontamination and disinfectant products and in the year ended 28 February 2007 total Group sales of Ebiox were approximately £929,000.

 

c.      Options have been granted to the holders of the Unsecured Loan Stock for an aggregate exercise price of up to £107,143 in cash over up to 7.29% of the equity in the Company's wholly owned subsidiary, Reproductive Sciences Limited (”RSL”), (which is proposed to be the holding company for the Company's 19.8% holding in Fertiligent Limited (“Fertiligent”), HCEG's option to acquire the majority of Fertiligent, and HCEG's entitlement to Fertiligent's associated sales and marketing rights). This implies a valuation of RSL of £1.47 million. Fertiligent is a high quality, low cost intrauterine sperm pump to help assist infertile couples conceive in a more effective, natural, less invasive manner than other more costly, conventional fertility treatments. Neither RSL nor Fertiligent had any turnover in the most recent full financial year.

 

The Directors, with the exception of John Gunn who is involved in the transaction as a related party, consider, having consulted with Numis Securities Limited its Nominated Adviser, that the conversion terms of the unsecured loan stock are fair and reasonable insofar as the shareholders of the Company are concerned.

 

 

A circular is being posted today to convene a General Meeting of the Company on Friday 29 February 2008 at which resolutions will be proposed to reorganise the share capital of the Company, to give authority to the Directors to allot equity securities, to disapply the statutory pre-emption rights; and to approve the ability of Nicholas Brigstocke to exercise the options granted to him pro rata to his participation in the October Placing. These matters were described in greater detail in the Company’s announcement released on Friday 1 February.

 

Enquiries:
 
Healthcare Enterprise Group
Lyndon Gaborit, Executive Deputy Chairman
 + 44 (0)1925 898 200   
 
Numis Securities
David Poutney
+44 (0) 20 7260 1000
 
College Hill
Adrian Duffield
Jon Davies
+44 (0) 20 7457 2020