QT Vascular has, on May 25, entered into a conditional sale and purchase agreement (SPA) to acquire a 60% stake in Asia Dental Group from Dr Gian Siong Lin Jimmy for a consideration of $7.65 million.

 

The proposed acquisition comes as QT Vascular seeks to diversify into the business of provision of dental services and general medical services

QT Vascular is a medical devices company that specialises in the minimally invasive treatment of vascular diseases.

 

As the diversification represents a change in the company&rsquo s risk profile, QT Vascular says it intends to seek the approval of its shareholders on the move.

 

Under the SPA, QT Vascular will implement a scheme of arrangement under the Companies Act to incorporate a new 100% holding company (NewCo) so that the existing shareholders will hold equivalent shares in the NewCo.

 

The listing status will also be transferred from QT Vascular into the NewCo.

The scheme will require, among other things, the approval of at least 75% of QT Vascular&rsquo s shareholders.

 

According to the filing on May 25, a corporate restructuring is to be held prior to the completion of the proposed acquisition.

 

Upon completion of the proposed acquisition, QT Vascular will own 60% of the issued and paid-up share capital of the target company, and Dr Gian will hold the remaining 40% stake in the new company.

 

The new company will, in turn, be the holding company of five Singapore-incorporated companies.

 

The indicative value of the 60% stake ranges between $5.5 million to $7.2 million as at Dec 31, 2020, based on the healthcare group&rsquo s management accounts.

 

The healthcare group was established over 35 years ago, and is in the business of providing dental and general medical services, as well as operations management and consultancy services to certain government entities. It currently operates three clinics, which are located at Wisma Atria, 100 AM and 38 Haig Road with 28 clinicians and 40 healthcare staff.

 

Of the consideration, $3 million will be paid in cash by QT Vascular, while another $500,000 will be payable through the allotment and issuance of shares in the new company at 0.18 cent per share. The shares will represent 12.4% of the total number of issued shares and 4.23% of the enlarged total number of shares.

 

Finally, an earn-out amount of $4.15 million will be paid in three tranches. The first two tranches of $1.38 million each in cash will be paid on the first and second anniversaries of the completion date of the proposed acquisition.

 

Up to $1.38 million will be paid in cash within five business days after the determination of the group&rsquo s total audited EBITDA for the three full completed financial years following the completion of the proposed acquisition, which are the financial years ending Dec 31, 2022 Dec 31, 2023 and Dec 31, 2024.

 

Should the total EBITDA be lower than the EBITDA threshold, the third tranche earn-out amount will be reduced by the shortfall amount.

 

In addition to the SPA, QT Vascular had, on May 25, entered into a subscription agreement with Tan Gim Chua Thomas, Quek Chin Thean and Chong Leong Fah Derrick. All three are private investors who were referred to QT Vascular by its legal advisors, Rajah & Tann Singapore.

 

Tan works in the healthcare industry, while Quek is the managing director of Glencore Singapore. Chong is in general insurance.

 

The trio have agreed to subscribe for a total of 4.05 billion new shares in the capital of the new company at an issue price of 0.18 cent per share, amounting to a total consideration of $7.3 million.

 

Tan will hold a 25.36% stake for a subscription amount of $3 million, while Quek will hold a 19.44% stake for a subscription amount of $2.3 million. Chong will hold a 16.9% stake for a subscription amount of $2 million.

The investors do not hold any shares &ndash directly or indirectly &ndash in QT Vascular as at May 25.

 

The issue price represents a discount of around 64.0% to the volume weighted average price (VWAP) of 0.5 cent for trades in QT Vascular&rsquo s shares on the SGX-ST on May 25.

 

According to QT Vascular, the company will use the net proceeds from the proposed subscription to partly finance the proposed acquisition. The remaining sum will be used as general working capital.

 

[JAKARTA] As Indonesia' s borders stay shut for a year and counting, people who used to travel overseas for medical treatment are turning to local hospitals.

 

" More and more cancer patients are showing up at the hospital that I went to," said Edyth Chatrina, a lawyer who took her 76-year old mother for lung cancer treatment at a Jakarta clinic run by PT Siloam International Hospitals. " Nearly all of them were being treated in Singapore before the pandemic."

 

Some 1.2 million Indonesians travel to neighbouring countries every year for health checkups and other medical services, according to Matt Zafra, Principal and Head of Asia Pacific Health and Life Sciences at consulting firm Oliver Wyman.

 

They collectively spend US$2 billion annually on treatments and account for more than half of medical tourists in Malaysia and Singapore, Mr Zafra wrote in an email.

 

While foreign patient visits for IHH Healthcare, which runs Mount Elizabeth Hospital in Singapore and Gleneagles Hospital in Malaysia, declined during the pandemic, Siloam is expecting a record 25 per cent margin for earnings before interest, tax, depreciation and amortisation in 2021. That forecast from chief financial officer Daniel Phua is higher than the consensus analyst estimate for Ebitda margin of 18.7 per cent for the full year, according to Bloomberg data.

 

Siloam' s stock has jumped 67 per cent in April and is set for its biggest monthly gain after the company posted US$11.4 million record profit in the fourth quarter. That compares with 1.8 per cent gain for Singapore-based rival Raffles Medical Group and 8.9 per cent loss for Thomson Medical Group, while IHH Healthcare, Southeast Asia' s largest-listed healthcare company by revenue, gained 1.3 per cent over the same period. Local peers PT Mitra Keluarga Karyasehat fell 0.8 per cent and PT Medikaloka Hermina added 2.2 per cent so far this month.

 

" We expect ongoing shorter-term challenges from the pandemic," said Kelvin Loh, managing director of IHH Healthcare. He didn' t quantify the business impact of the drop in foreign patients, but said local patients recorded a steady recovery in the second half of 2020.

 

Ms Chatrina' s mother herself used to be treated at Mount Miriam Hospital in Penang, Malaysia, before the pandemic led to shut borders. Her doctor then referred her to Siloam' s cancer specialist clinic in Jakarta to continue her therapy.

 

Wealthier Indonesians prefer overseas treatments due to a " lack of trust in the local system and infrastructure" as well as a shortage of health facilities and medical talent onshore, according to Oliver Wyman' s report in 2018.

 

The pandemic has given Indonesian hospitals a " once in a lifetime opportunity" to prove their quality of care, said David Arie Hartono, analyst at Korea Investment & Securities in Jakarta. A resumption of international travel, which could happen as early as the second half of 2021, will put that to the test.

 

" The Indonesian hospital industry can show their customers what they can offer to the patients," Mr Hartono said. " If they can prove themselves, they can retain these patients and prevent them from seeking treatments abroad."