Picture: ISTOCK
Picture: ISTOCK

Life Healthcare’s share price dropped as much as 9% after the company issued nil-paid letters on Wednesday.

Shareholders received 34 nil-paid letters for every 100 Life Healthcare shares held.

The letters traded in a range of R6.97 and R6.40, with more than 1-million changing hands for a total of R7.7m by 11.45am.

The firms’s share price closed at R30.75. With the value of the nil-paid letters added in, Life Healthcare shares remained at about Tuesday’s R33.70 closing price.

Each nil-paid letter allows its holder to buy a Life Healthcare share for R24.50 in the group’s R9bn rights offer.

The capital is being raised to pay for Life Healthcare’s acquisition of the UK’s Alliance Medical Group, announced in November. Life Healthcare agreed to pay a £553m cash and up to a further £40m if the UK group met financial targets.

Life Healthcare described Alliance Medical as one of western Europe’s leading providers of complex molecular and
diagnostic imaging services with strong market positions in the UK, Italy and Ireland.

“Alliance Medical is well positioned in attractive growth markets underpinned by favourable structural drivers including: ageing populations; growing disease burden; capacity constraints in public health systems and the demand for improved access to diagnostics,” Life Healthcare said
in November 2016.

According to Life Healthcare, Alliance Medical “enjoys embedded partnerships” with national healthcare systems including a long-term relationship with the National Health Service in England through the national positron emission tomography and computed tomography framework.

Alliance Medical also owns in Italy the largest portfolio of out-of-hospital clinics.

Over the past few years, Life Healthcare has expanded into mental health, acute physical rehabilitation, renal dialysis
and oncology.

The acquisition provided Life Healthcare an opportunity to diversify into geographies with a “strong basket of currencies, it said.

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