Company Update

RNS Number : 0566P

The MedicX Fund Limited

18 March 2009

 



THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN

For Immediate Release

18 March 2009

MedicX Fund Limited

('MedicX Fund', 'the Fund' or 'the Company')

Company Update 

MedicX Fund (LSE: MXF), the specialist primary care infrastructure investor in modern purpose-built primary healthcare properties in the United Kingdom, announced on 29 January 2009 that it was considering raising additional monies by way of an equity issue. 

The Company expects shortly to publish a prospectus in relation to this fund raising (the 'Prospectus'). The Prospectus will include a valuation of the Company's portfolio of properties as at 28 February 2009, which is expected to be approximately £146 million. This valuation equates to an anticipated net initial yield of approximately 6.12 per cent.

Unaudited net asset value per ordinary share

As at 28 February 2009, the unaudited net asset value per ordinary share is expected to be 65.7p, as derived from the Company's management accounts and incorporating the expected valuation of the Company's property portfolio as at 28 February 2009. As at the same date, the unaudited adjusted net asset value per ordinary share (excluding goodwill and deferred tax that is not expected to crystallise) is expected to be 63.8p.

Unaudited adjusted net asset value per ordinary share reflecting fixed rate debt at fair value

The Company has a £100 million secured debt facility provided by Norwich Union Commercial Finance, at a fixed rate of 5.008 per cent. on an interest only basis. The debt was fully drawn down on 1 December 2006 and is repayable in its entirety on 1 December 2036.

As at 28 February 2009, the mark to market fair value of the fixed rate debt is expected to be £84.5 million. At the same date, the unaudited adjusted net asset value reflecting the fixed rate debt at its fair value is expected to be equivalent to 83.2p per ordinary share.

Discounted cash flow valuation of assets and debt

Medicx Fund considers that it has similar characteristics to infrastructure funds which typically calculate the value of their investments based upon discounted cash flows. The Company's Investment Adviser has independently carried out an unaudited discounted cash flow valuation of the Company's assets and associated debt as at 28 February 2009.

The discount rates used are 7 per cent. for completed and occupied properties and 8 per cent. for properties under construction. The discounted cash flows assume an average 3 per cent. per annum increase in individual property rents at their respective review dates, residual values based upon capital growth at 1 per cent. per annum from current valuation until the expiry of leases, when the properties are notionally sold, and also assuming the current level of borrowings. Based upon these assumptions, the discounted cash flow valuation of the Company's assets and debt, as at 28 February 2009, is expected to be equivalent to 104.2p per ordinary share.

Dividends

As announced in the Company's interim management statement on 25 February 2009, in the absence of unforeseen circumstances, the Company will pay in July 2009 an interim dividend of 2.665p per ordinary share. Furthermore, the Company expects, subject to unforeseen circumstances, to pay dividends totalling 5.33p per ordinary share (including any new ordinary shares to be issued pursuant to the Company's proposed fundraising) in respect of the year ending 30 September 2009 (including the interim dividend of 2.665p referred to above).

Investment Adviser fees

As announced in the Company's interim management statement on 25 February 2009, it is proposed that, conditional on the fund raising proceeding, the basis upon which the Investment Adviser's fees are paid will change to the Company's benefit. Under the new arrangements, the investment advisory base fee in relation to gross assets (excluding cash) in excess of £150 million would be cut significantly and a new performance fee introduced. The investment advisory base fee and performance fee earned in any one financial year would not exceed 1.5 per cent. of gross assets (excluding cash), such limit being equivalent to the current investment advisory base fee.

There would be no investment advisory base fee payable on gross assets of between £150 million and £300 million (excluding cash). Above this threshold of £300 million, an investment advisory base fee of 0.75 per cent. of gross assets (excluding cash) per annum would be payable.

The Investment Adviser will only be capable of earning a performance fee if the total return to Shareholders in terms of share price growth and cumulative dividends received ('Total Shareholder Return') exceeds 8 per cent. per annum. The Investment Adviser will be entitled to a performance fee equal to 15 per cent. of the amount by which the Total Shareholder Return exceeded an 8 per cent. per annum compound hurdle rate calculated from the issue price of the proposed fundraising, subject to a high watermark. If in any year the Total Shareholder Return falls short of 8 per cent. per annum then the deficit in Total Shareholder Return will have to be made up in subsequent years before any performance fee can be earned. Unlike the previous performance fee structure, the compounding of the 8 per cent. hurdle rate will be adjusted upwards to compound from the high watermark level at which the performance fee was last earned.

A further announcement will be made in due course once the Prospectus has been published.

-Ends-

For further information please contact:

MedicX Fund	[phone]
David Staples, Chairman
MedicX Group	[phone]
Keith Maddin, Chairman
Mike Adams, Managing Director
Buchanan Communications	[phone]
Charles Ryland/Mary-Jane Johnson/Miranda Higham
Collins Stewart Europe Limited
Robbie Robertson	[phone]
Dominic Waters	[phone]
Neil Brierley	[phone]
Will Barnett	[phone]

Important Information

This announcement and the information contained herein is restricted and is not for publication, release or distribution in whole or in part in the United States, Canada, Australia or Japan.

This announcement does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase, any securities of the Company and any purchase of securities of the Company pursuant to any equity issue undertaken by the Company should only be made on the basis of the information contained in the final prospectus to be published by the Company and any supplement or amendment thereto (the 'Prospectus'). When made generally available, copies of the Prospectus may, subject to any applicable law, be obtained at no cost at the registered office of the Company or from the Document Viewing Facility, UK Listing Authority, The Financial Services Authority, 25 North Colonnade, Canary Wharf, London E14 5HS. The Prospectus will supersede all information provided before the date of the Prospectus and any investment decision must be made only on the basis of the information contained therein.

Certain statements contained in this announcement may be forward-looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein.

None of Collins Stewart nor the Company undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A prospective investor should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement.

The contents of this announcement have been prepared by and are the sole responsibility of the Company. Collins Stewart Europe Limited ('Collins Stewart') is acting exclusively for the Company and no one else in connection with the equity issue. Collins Stewart does not regard any other person (whether or not a recipient of this announcement) as its client in relation to the equity issue and will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for giving advice in relation to the content of this announcement or any transaction or other matter referred to herein.

 

END

 

 

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