MRI, the medical and emergency services outfit which is struggling to recover from losses, has come under a spate of take-over bids from a group of suitors that include one of the giant medical aid schemes.
By Friday, details of the intended transactions were sketchy but Sunday Standard was able to establish that “the negotiations were at an advanced stage”. It is understood that the board meeting that was held on Friday was appraised of the new developments relating to the possible bid.
Three monied companies, which include a medical aid scheme-backed private equity funds, are eyeing the company which has been limping financially for the past three years.
Earlier last month, MRI issued a cautionary statement alerting its shareholders that the controlling shareholders of the company “have received a number of unsolicited proposals from parties interested in purchasing a controlling interest in the equity of MRI.”
This week, the market was unnerved by the developments as analysts were of the opinion that the suitors realize value from the company since one of the lead suitors is a medical aid scheme outfit.
“I think it makes sense for a medical aid scheme to be interested in the bid but I think they will eventually de-list the company from the exchange because they would not want to be faced with compliance issues,” one observer said Friday.
This is the second time for MRI to come under a bid challenge as G4S once attempted to do the same with the company but that was rejected by the main shareholder. The recent development seems to have been well received by the major shareholders of the company who have been locked in protracted negotiations since November last year.
The new developments also come at a time when shareholders of the company are confident about a turn around in the fortunes of the company since the coming in of the new Managing Director, Rockie Mmutle.
Although revenue of the half year period to December 31, 2007 slouched three percent to P 9.8 million against a comparable period, it said direct costs have stabilized because there are stringent cost controls and policies to manage the main cost drivers.
“The new management team, lead by an experienced Managing Director, is now firmly in place and the directors are buoyed by current developments in the Group’s core business activities, including expansion to offer on-site medical expertise in the burgeoning mining sector.
“The generally positive economic outlook is providing a vehicle for future growth. The Group continues to invest in people and new technologies to take advantage of the many opportunities developing within Botswana economy,” the company said in a statement.
MRI performance has been found wanting since it lost a government contract for road assistance- which led to a bitter court case which it eventually lost.
Further, a spike in fuel costs and the rise of imports sourced from USA through South Africa, 14 percent retainer fee hike for the company’s aircraft and an aggressive recruitment of paramedic also dented its pockets.
However, measures, aimed at improving its balance sheet and which are expected to be felt in the future, are now in place.
Some of the initiatives include an aggressive cost cutting plan, the launch of Zebra Card and the planned telemedicine product.
“A new initiative in Telemedicine will be launched in the new year and will significantly improve the capabilities of the emergency medical service personnel as well as provide opportunities for the company with the general health sector.
“Our emergency service has further been enhanced with the purchase of a neonatal intensive care incubator which places MRI in the unique position of being the only service provider that can safely transport neonates,” MRI said last year.
MRI closed at 112 thebe on Friday without trading.