OFFSHORE VENTURES
Netcare to dispose of its UK interests
Hospital group Netcare plans to exit the UK, joining a long line of South African companies that have had their fingers burnt by ambitious offshore ventures that failed to deliver on expectations. Woolworths recently announced a R7bn write-down of its Australian business David Jones, and Famous Brands’s 2016 acquisition of Gourmet Burger Kitchen soured. On Wednesday, Netcare said it had decided to dispose of its controlling stake in the UK’s biggest private hospital group, GHG, due to difficult trading conditions and its inability to negotiate a rent reduction despite five years of talks. Netcare acquired GHG in 2006, which was subsequently restructured into an operating company called Opco or BMI Healthcare, and a series of property companies called PropCo that held the hospital properties and rented them to BMI Healthcare under long-term agreements. Those agreements included annual rent escalations of 2.5%, which have compounded over time. Netcare now paid 20% of its revenue in re...
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