Hotbed for nursing home

Private investor network Hotbed has raised £4 million from its members, as part of a total £15 million expansion capital package for nursing homes operator Mimosa Healthcare.

Over 70 of Hotbed’s members pooled together to supply the cash, with the remaining £11 million provided – through debt facilities – by HSBC. Under the terms of the deal one Hotbed member, Michael Smith, will become Mimosa’s non-executive chairman. A former director of BUPA, Smith previously held a similar position at fellow care home provider Bettercare, while it was backed by 3i.

Mimosa plans to use the cash to open several new homes. At present, it operates 18 centres and provides beds for 850 residents. It is hoped that the new cash injection will enable it to lift the latter figure to well over a thousand. ‘This funding will allow us to enhance the value of the business through the selected purchase of freehold care homes to complement our mainly leasehold portfolio,’ founder Anthony Massouras explained.

‘The care home sector has attracted considerable interest from the mainstream private equity institutions in the past few years… so we are delighted to have been able to offer this opportunity to our members,’ added Hotbed private equity head Bernard Dale.

£15m injection for nursing home expansion plans Private investor network provides the capital Nursing home group Mimosa Healthcare Ltd is set to expand its extensive Yorkshire operations following a £15m injection of development capital from members of Hotbed, the private investor network and HSBC Bank plc.

Mimosa was set up in 2000 by Anthony Massouras and is now one of the largest independent nursing home groups in the UK.

It has 18 homes and more than 850 beds. The deal with Hotbed will enable Mimosa to add several new freehold homes to its estate to take bed numbers to well over 1,000.

Mimosa's headquarters are in Nottingham with most of the homes based in Yorkshire. The homes are purpose-built for the provision of nursing and residential care. In addition the group operates a number of specialist care beds and services for young physically disabled people.

It also provides addiction recovery services via Mimosa Recovery, its alcohol and drug detoxification and recovery division. Bernard Dale, Head of Private Equity at Hotbed, said: "The care home sector has attracted considerable interest from mainstream private equity institutions in the past few years and their appetite for these kinds of opportunities shows no signs of abating.

"So we are delighted to have been able to offer this opportunity to our Investor Members. He added: "Mimosa is operating very successfully in a growing market in which demand is being fuelled by demographic and social changes and where supply is limited.

"This, in addition to the high quality asset-backed nature of the business and vision of the management team driving the business forward, makes it an attractive investment proposition."

Laing & Buisson, an information and market intelligence provider for the sector, estimates that the total value of the care home market for the elderly and physically disabled within the UK is more than £10 billion.

Anthony Massouras of Mimosa adds: "This funding will allow us to enhance the value of the business through the selected purchase of freehold care homes to complement our mainly leasehold portfolio of quality homes.

"It will also enable us to continue our strategy of adding value to the company by enhancing the growth of our specialist services. "This will be in addition to the quality care services for which we have become known."

15 July 2005

Hotbed and HSBC back Mimosa growth plans

14 July 2005.
Mimosa Healthcare Group says it plans aggressive expansion following £15m capital injection from Hotbed private investor network and HSBC bank.

Alternative funds
By David Blackwell
Published: July 22 2005 03:00 | Last updated: July 22 2005 03:00

It also prompts the question - would it have been better to seek an alternative source of funding and come back to the market later?

According to AngelBourse, which helps small companies to find wealthy backers, a noticeable trend is developing of companies coming to London to raise money ahead of an initial public offering (IPO).

John Blowers, managing director at AngelBourse, believes that Aim's success with overseas companies is making London "the leading global small-cap market". About 14 per cent of the companies that approached AngelBourse to raise capital in the first half of this year had overseas origins compared with only 8 per cent for the whole of last year.

So far, the organisation has funded or is seeking funds for four - Countermine Technologies of Sweden, which provides machinery to clear mines; Pure Profile, an Australian consumer database specialist; In Game Advertising of Germany, which deals with advertising in computer games; and Video Without Boundaries of the US, which enables consumers to download films from the internet.

AngelBourse specialises in providing early-stage funding up to £3m. A company raising the maximum should expect to pay about £150,000 in fees, said Mr Blowers.

However, as Aim attracts more companies, expect even bigger sums to be raised ahead of an eventual IPO. Last week, Hotbed, another private investor group, announced its biggest deal in the three years since its foundation, raising with HSBC a total of £15m for Mimosa Healthcare.

Gary Robins, of Hotbed, says the cost to Mimosa was about £500,000, including legal, accounting and due diligence fees. "We are seen as an alternative to flotation," he claims. "We are seeing more opportunities for pre-IPO funding than 18 months ago in the UK - partly because there is more activity on Aim and partly because our profile is growing."

Mimosa has annual turnover of about £15m from its 18 care homes. It will use the latest funds to start buying freehold properties in preparation for flotation.

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Mimosa to expand after Hotbed funding

Hotbed has invested £4 million of grown capital in Mimosa Healthcare, a £14 million turnover care homes group.

Mimosa was set up in 2000 by Anthony Massouras and is now one of the largest independent nursing home groups in the UK, with 18 homes an dmore than 850 beds. Its headquarters are in Nottingham with most of the homes based in Yorkshire.

Bernard Dale, head of private equity at Hotbed, said "This size of this investment is our prime target and we have now established a track record of delivery with nearly £50 million invested to date in transactions totalling £180 million in value.

"The healthcare sector is an active one and we are pleased to be able to ffer our Investor base the opportunity to invest in an established and growing business in this field."

HSBC's South Yorkshire Corporate Banking Centre in Sheffield provided the term debt and working capital facilities for Mimosa Helathcare to finance the expansion of the group through acquisition of freehold care homes. DLA Piper Rudnick Gray Cary's Sheffield office provided legal advice to HSBC.

David Hunt led the HSBC team and said: "We are delighted to support Mimosa Healthcare with its exciting expansion plans, and look forward to seeing them come to fruition over the coming months".

Eastwood Anglo Corporate Finance Ltd acted as coproate finance advisor to Mimosa Healthcare and introduced the deal to Hotbed Ltd. The deal was led by Bill Eastwood and Tom Eastwood, both directors and co-owners of Eastwood Anglo Corporate Finance Ltd.

Tom Eastwood said "Mimosa approached us with a view to raising expansion capital to fund the acquisition of freehold properties in order to balance the existing portfolio of leasehold properties.

"We prepared the financial models used in the due diligence and prepared forecasts based on management expectations of future acquisitions and the trading of the existing homes. Using these models we negotiated and agreed terms with Hotbed Ltd on behalf of Mimosa."

GLP acted as business and property advisers to Hotbed.

Andrew Long, MD of GLP, said: "We advised upon asset quality, compliance with regulations, management control and standards and trading performance.

"GLP is dedicated to the healthcare sector and this is very much core competency. We have huge depth of experience and knowledge in this market acting for a number of corporate operators, local authorities, not for profit organisations and various investors to the healthcare market."

LCS International Consulting Limited undertook commercial due diligence on behalf of Hotbed and related advice on the sector as well as assisting KPMG on industry KPIs.

Peter Champness, who led the LCS team, said "LCS combines analytical and valuation expertise. Our key strength is based on unrivalled industry knowledge, international research and in-depth analysis from which is derived reasoned opinions targeted on key areas of investor concern, such as industry benchmarking, future growth, validity of business model, rival competitive strategies and exit multiples.

Nick Lloyd and Nathalie Dunbar of emw law acted for Hotbed and its investor memebers on the equity and secured loan investments into Mimosa. In addition a team headed by emw's Sally Hopwood prepared the legal due diligence report for Hotbed and HSBC.

Mr Lloyd said "emw's corporate finance team of five partners and eight solicitors act on a wide range of corporate finance matters but debt and equity funded acquisitions and reorganisations are central to the team's caseload. The existence of a specialists due diligence team within emw allows us to move swiftly to prepare a report that is set out in a manner that is helpful to management and funders alike.

"This is another good offering to the Hotbed investor member network - we hope it delivers great returns to management and investors alike"

Corp UK - 18 August 2005

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Hotbed completes £15 million nursing home investment

The deal

Nursing home group Mimosa Healthcare has received £15 million from private investor network Hotbed and HSBC Bank plc.

The company will use the finance to add new properties to its portfolio as part of its strategy to increase the number of beds in its portfolio to more than 1,000.

The players

Mimosa’s founder, Anthony Massouras, told reporters that the funding will be used to finance the group’s growth strategy. “This funding will allow us to enhance the value of the business through the selected purchase of freehold care homes to complement our mainly leasehold portfolio of quality homes.”

Under the terms of the funding, Hotbed member Michael Smith, a former BUPA director and non-executive chairman of Bettercare, will become Mimosa’s non-executive chairman.

The funders

Hotbed raised £4 million to invest in the business from more than 70 of its members, with HSBC providing £11 million of debt.

Hotbed’s head of private equity, Bernard Dale, told reporters: “The care home sector has attracted considerable interest from mainstream private equity institutions in the past few years and their appetite for these kinds of opportunities shows no signs of abating.

“Mimosa is operating very successfully in a growing market in which demand is being fuelled by demographic and social changes and where supply is limited,” he added. “This, in addition to the high quality asset-backed nature of the business and vision of the management team driving the business forward, makes it an attractive investment proposition.”

HSBC’s David Hunt, senior corporate manager in its South Yorkshire Corporate Banking Centre, said the bank provides community-based managers to make swift decisions, which was important in this deal to overcome several challenges as the transaction progressed.

“We have been particularly impressed with Mimosa’s management team and look forward to seeing their expansion plans come to fruition over the coming months,” he added. “We were very pleased to work on this deal with Hotbed, which has proved to be an effective way for individual investors to participate in an equity fundraising.”

The adviser

The deal was introduced to Hotbed and HSBC by Mimosa’s corporate finance adviser Eastwood Anglo, led by directors Bill and Tom Eastwood.

Bill Eastwood said the firm was approached by Mimosa’s directors to help raise the capital to buy freehold properties. “We prepared the financial models used in the due diligence process and prepared forecasts based on management expectations of future acquisitions and the trading of the existing homes. Using these models we negotiated and agreed terms with Hotbed on behalf of Mimosa.”

“This fund raising and the process has enabled what was essentially a private business owned and run by the sole shareholder, Anthony Massouras, to progress its ambitions of becoming a major nursing and residential healthcare provider in the UK,” he added. “We look forward to working with Mimosa in the future and aiding in the continuing expansion plans for the group.”

Hotbed received business and property advice from GLP, with managing director Andrew Long leading its team.

Long said the firm advised on the asset quality, regulation compliance, management control and standards and trading performance. “GLP is dedicated to the healthcare sector and this is very much its core competency,” he added. “We have a huge depth of experience and knowledge in this market acting for a number of corporate operators, local authorities, not for profit organisations and various investors to the healthcare market.”

Hotbed appointed LCS International Consulting and KPMG to manage commercial and financial due diligence reviews of Mimosa.

LCS’s team was led by managing director Peter Champness, while Keith Buck and Alex Porter handled KPMG’s review.

Mimosa was advised by law firm Hay & Kilner’s corporate finance team, led by Mark Adams.

Background

Nottingham-based Mimosa was established five years ago and today has 18 homes housing more than 850 beds.

The group also operates a number of specialist care services for young physically disabled people and residential treatment facilities for alcohol and drug addiction.

Mergers & Acquisitions online - September 2005

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Focus Dynamics         Samuel Eden

INVESTORS CHRONICLE: NEWS ANALYSIS: FOCUS DYNAMICS

Investors Chronicle - United Kingdom; Sep 24, 1999
Directors of Focus Dynamics considered triggering their options to reduce bidder Breckenburn's stake but this did not prove practicable. So the engineer's management has reluctantly recommended the 32p a share bid. Breckenburn is delisting the shares on 15 October - exactly one month after it declared its bid wholly unconditional. The Stock Exchange changed its rules in January, allowing delistings where there is only a straight majority in favour. Investors will languish as minority shareholders, so it is best to accept the bid.

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INVESTORS CHRONICLE: NEWS ANALYSIS: FOCUS DYNAMICS

Investors Chronicle - United Kingdom; Sep 17, 1999
Another recent example of 3i reducing its stakes is Focus Dynamics. It sold part of its shareholding which enabled bidder Breckenburn to take its holding to over 50 per cent. At its first closing date on 14 September - not 14 December as we accidentally said last week - there were 51.6 per cent acceptances. Breckenburn has now declared its bid for Focus wholly unconditional but small shareholders have no need to rush to accept it just yet. The bid has been extended until further notice but is likely to remain open for a few weeks. Even though Breckenburn appears to have the upper hand investors have little to lose in delaying their acceptances. It will delay payment but the interest forgone will be small even after the recent base rate rise. The only way of getting a better deal is standing up to Breckenburn which is threatening to delist the shares. Whether there is any chance of a better deal should be clearer next week.

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YORKSHIRE POST: BUSINESS: FOCUS TO GO PRIVATE

Yorkshire Post - United Kingdom; Sep 17, 1999
Industrial control equipment maker Focus Dynamics said yesterday its board reluctantly backed a takeover by Breckenburn after the latter won control of 51.63 per cent of Focus. On Wednesday, Breckenburn, a new company formed specially to buy Focus and take it private, declared its 32p per share offer for Focus unconditional, saying it either owned or had acceptances for 51.63 per cent of Focus stock.

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AFX (UK): BRECKENBURN CLAIMS 51.63 PCT OF FOCUS DYNAMICS

AFX UK (Focus); Sep 15, 1999
Breckenburn Ltd, the management buyout vehicle headed by Trevor Wheatley, said it now has 51.63 pct of Focus Dynamics PLC following its 32 pence per share cash bid for the company, which has been rejected by the Focus board. Breckenburn said that, at 3:00 PM on September 14, it had valid acceptances from the holders of 7.96 mln Focus shares, equal to 48.36 pct of Focus' issued share capital. In addition, it owned 539,000 shares, or 3.27 pct. In a statement on September 7, the Focus board reiterated its rejection of the MBO bid, saying it will dispose of its businesses in the absence of a higher offer as it believes this will give more cash to shareholders. Net cash balances on July 31 were 2.774 mln stg, equivalent to half the value of the offer, it said. Breckenburn responded that Focus has not received any firm offers on which to base its break up proposal. Today Breckenburn said: "The offer will remain open for acceptance until further notice". mh/

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INVESTORS CHRONICLE: NEWS: BIDS - FOCUS DYNAMICS THREATENS A BREAK-UP TO FIGHT OFF BID

Investors Chronicle - United Kingdom; Sep 10, 1999
Focus Dynamics is trying to fight off a 32p a share bid by Breckenburn by saying it will break itself up. It reckons that it will take around six months to sell off all the parts of the business and return the cash to shareholders. Focus believes that even after the costs of selling the operations and closing down the company shareholders could receive at least 50p a share - or even as much as 70p a share, although that looks optimistic. Both the other potential bidders have withdrawn. Breckenburn's strong position in terms of acceptances, including non-binding acceptances, total just over 50 per cent. Focus says it still has pounds 2.77m of cash, which is the equivalent of 16.8p a share or half the value of Breckenburn's bid. Focus chief executive Mike Gulliford says that the businesses are no longer consuming cash so this should not reduce significantly. On a negative note, a potential buyer for the machine knives business has lowered its offer to less than pounds 4m. Stripping out the cash included in one of the acquisitions, the drives business cost pounds 5.7m to build up. Breckenburn intends to sell the business to Trevor Wheatley's own company for about a quarter of this value, depending on its net current assets on completion. The figure is connected to the amount Mr Wheatley will get for his stake in Focus, which cost him pounds 3m. Breckenburn believes that all or most of the non-binding acceptances it has got will become fully fledged acceptances by 14 December, which is the first closing date of the offer.

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YORKSHIRE POST: BUSINESS: FOCUS DYNAMICS REJECTS WHEATLEY BID

Yorkshire Post - United Kingdom; Sep 08, 1999
FOCUS Dynamics, the former Sheffield-based Tyzack Precision, posted its defence document yesterday rejecting the bid by former chairman Trevor Wheatley and his company Breckenburn. Focus admitted that bidders who had been interested in the company as a whole had now withdrawn, but said the Breckenburn bid was significantly below the company's fair break-up value. Focus is recommending that it be allowed to sell off the different parts of the group as it believes it can achieve "substantially more" than the 32p offered by Breckenburn. In retaliation Breckenburn said Focus had not received a firm offer for any part of he group on which to base its break up proposal. It also called on Focus to release trading results for the year to July 31.

MCC

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AFX (UK): FOCUS DYNAMICS REAFFIRMS REJECTION OF BRECKENBURN BID; MAY DISPOSE BUSINESSES

AFX UK (Focus); Sep 07, 1999
Focus Dynamics PLC re-iterated its rejection of the 32 pence per share bid for the company by management buyout vehicle Breckenburn and added that, in the absence of a higher offer, it aims to dispose of its businesses in a way which would give "substantially more" cash to shareholders than the takeover proposal would have offered. Breckenburn, the vehicle backed by Focus director Trevor Wheatley and venture capitalists, made a bid for Focus Dynamics in August. "The directors are of the view that a reasonable break up valuation should return to shareholders substantially in excess of the current bid level," the company said in a 'defence document' to shareholders'. "Consequently, in the absence of a higher offer, the board intends to recommend the orderly disposal of the constituent businesses of the company with a view to returning substantially more than 32 pence of cash per Focus Dynamics share to shareholders within six months." The group said the rejection was based on, among other things, the fact that its net cash balances 2.774 mln stg as of July 31 were alone equivalent to over half the value of the offer. It added that it has received a number of indicative offers for its components division from potential purchasers which would valued the business at levels ranging up to 4.124 mln stg - equating to 25 pence cash per Focus share. It also said that trading since mid July has been "more encouraging". vip.

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EXTEL COMPANY NEWS: TYZACK PRECISION PLC: BOARD BELIEVES THAT BRECKENBURN LTD'S OFFER SUBSTANTIALLY UNDERVALUES COMPANY, ITS CURRENT BUSINESSES AND PROSPECTS.

Extel Company News - United Kingdom; Sep 02, 1999
Board believes that Breckenburn Ltd's offer substantially undervalues Company, its current businesses and prospects. Board has received expressions of interest which may result in either higher offer for Company's shares or more attractive proposals being received within Breckenburn offer period. Accordingly, board, which has been advised by Albert E Sharp Securities, strongly recommends that shareholders take no irrevocable action at this time in relation to Breckenburn offer.

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INVESTORS CHRONICLE: NEWS ANALYSIS: FOCUS DYNAMICS - RUSH TO SELL WELL BELOW NAV

Investors Chronicle - United Kingdom; Aug 27, 1999
Focus Dynamics is the latest example of how many large shareholders are willing to accept low bids just to liquidate their holding in a small company. Former directors Trevor Wheatley and Bill Eastwood have put together a buy-out vehicle called Breckenburn with the help of Sandy Anderson of Porterbrook train leasing fame. They have tabled a 32p a share offer for Focus with the express intention of breaking it up and liquidating the assets. The bid values the company at pounds 5.3m. Trevor Wheatley has a 25.6 per cent stake and Bill Eastwood owns 0.7 per cent. On top of this, the bid has already received acceptances to take the total past 50 per cent. The shares are currently trading at 33.5p. Yet at the end of January 1999 Focus had net cash of pounds 2.9m and a net asset value of 50p a share. Admittedly Focus warned that second half trading was disappointing. But it has not been bad enough to reduce the company's asset value to anywhere near the bid level. Trevor Wheatley's company Drives Direct has agreed to buy the controls division for pounds 1.35m - subject to an adjustment for the level of cash and net current assets in the business. The two main parts of the division were bought last year for pounds 6m. Trading has not been so bad that they are now worth only a small fraction of their cost. On top of this four Focus Centres selling drives and controls have been set up leading to more money being invested in the division. There will have been a cash outflow in the second half but it seems likely that Focus still has more than pounds 2m of net funds. That still leaves two businesses - machine knives making and filtration - which had a combined net asset value of pounds 2.76m attributed to them in last year's accounts. Bill Eastwood is the obvious buyer for the knives business and that should be worth well over pounds 2m. The value of the loss-making, French filtration business is more difficult to quantify. Focus did try to sell it but could not find a buyer. But the bid's timing looks spot on because it has won a new contract, which means that the current six- month period will be profitable. However you look at the bid, it is too low and it might be designed as an opening shot to flush other bidders out. It would be a shame if the bid went through just because institutions were desperate to get out of what has obviously been a poor investment.

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YORKSHIRE POST: BUSINESS: FOCUS DENIAL BLURS 'GBP5.3M TAKEOVER'

Yorkshire Post - United Kingdom; Aug 24, 1999
CONFUSION reigned at Focus Dynamics yesterday after the company denied that it had given its blessing to a GBP5.3m takeover led by former chairman Trevor Wheatley. Last Friday Breckenburn, a company formed specially to buy Focus, issued a statement saying that its bid had been recommended. But yesterday Focus - the former Sheffield engineer Tyzack Precision - said the bid had not been recommended and it hoped to get a higher offer. "Focus Dynamics has recently received expressions of interest from other parties, which may result in either higher offers or more attractive proposals for shareholders," the company said in a statement. Yesterday the mistake was attributed to the Stock Exchange rather than an over zealous attempt by Breckenburn to win control. Breckenburn, owned 74 per cent by venture capitalist Sandy Anderson and 26 per cent by Trevor Wheatley, is offering 32p per Focus share valuing the company at GBP5.3m. Yesterday Focus chief executive Mike Gulliford said the Breckenburn offer was a break-up bid which did not represent fair value for the group's constituent parts. "If accepted, the board believes that this offer will represent an inadequate return to shareholders. It significantly undervalues the businesses in the group," he said. Mr Wheatley, who still owns 26 per cent of Focus, said he thought the 32p a share offer represented good value for investors. "If successful I would buy the drives-related business and Breckenburn would take the Tyzack business and the filters business in France and sell them off." It was not clear yesterday who the other bidders might be, but Mr Gulliford said the company had received approaches from a plc and an unlisted company. He refused to comment on speculation that the management might be considering a takeover of the drives-related business. To add to the confusion, Breckenburn announced on Friday that it either owned shares or had pledges to accept its offer from shareholders representing 50.5 per cent of Focus. But some of these pledges are non-legally binding letters of intention. It is thought that institutions will now reserve judgment until they see if a better offer is made. On top of the 26 per cent stake owned by Mr Wheatley, Breckenburn bought a further 3 per cent stake on Friday. A GBP5.76m hostile bid for Focus by investment company Corporate Resolve was withdrawn in January after receiving only 12 per cent acceptances. Corporate left in place an alternative paper offer of 30p a share. This latest saga in Focus's fortunes follows a turbulent period since shareholders voted in January 1998 to turn ailing engineer Tyzack Precision into a provider of electrodrives, motors, fans and pumps. Shareholder Trevor Wheatley was the brains behind the plan and he took over the reins as executive chairman. But two months later he was forced to step down because of legal restrictions by his former employer Emerson. Since then Focus has seen its share price plummet.