Life Healthcare may list

Johannesburg - The JSE may welcome another private hospital group to its board during the course of next year as both investment groups Mvelaphanda (Mvela) and Brimstone Investment Corporation have indicated plans to unlock value for their respective shareholders.

Both hold 22% each of the Life Healthcare hospital group, while management holds the balance. Mvela and Brimstone are both frustrated by lower market ratings which discount them to net asset value, typical of investment holding companies.

Mvela announced on Thursday it will be embarking on a restructuring process that will unbundle some of its assets directly to shareholders.

"We believe the current corporate structure has now run its useful life and we are therefore considering a number of options in order to unlock value for our shareholders," said CEO Yolanda Cuba after releasing financial results for the year to end-June 2009.

Mvela said its board has agreed to the realisation and unbundling of the assets and distribution to shareholders over a period of time. The current price of 650c is an 18% discount to the stated 790c per share net asset value (NAV).

"From our point of view the discount represents value for shareholders," said Cuba. "We'd like to unlock that and return it to shareholders. Some assets might be listed and unbundled directly to shareholders and others sold."

Brimstone has a similar problem to Mvela with regards to the discount to NAV, only that Brimstone's 32% discount is worse than Mvela's. Brimstone has told Fin24.com in the past that it would like to unlock the value for shareholders. "We intend implementing value-unlocking strategies on an individual and portfolio basis," said Brimstone's Fred Robertson at the time.

According to the shareholders' agreement at Life Healthcare, any backer owning above a certain number of shares can call for a listing, Cuba told Fin24.com. She wouldn't divulge what that number is, adding that any announcement with regard to an unbundling would be made closer to the company's annual shareholders' meeting in October.

Although no assets have yet been identified for the unbundling, Cuba told Fin24.com that all the group's investments are candidates for restructuring and unbundling, which can take up to 36 months once announced.

Only those assets in media and telecommunications are out of bounds, said Cuba. These are Mvela's 25.5% stake in media house Avusa and 12.3% stake in Vox Telecom.

The 10.7% of Group Five that Mvela owns is locked-in until 2014, but Cuba said there's an escalation clause to bring that forward to 2012. Through the 44.7% ownership of the Batho Bonke consortium, Mvela effectively owns less than 3% of Absa Group. The shares cannot be traded before March 2011.

That leaves Life Healthcare and Mvela's wholly owned and operated Mvelaserve as readily available candidates for unbundling. Mvelaserve also houses operating entities like the Protea Coin security group and Total Facilities Management.

- Fin24.com