Pula Medical Aid has shown interest in acquiring and administering the embattled Symphony Health Trust membership book, this was revealed by the trust’s curator at the second special general meeting held on Thursday.
The latest meeting was a follow up to the first meeting held on the 19th of February where members of Symphony Health Trust members had to make a tough decision between the winding up of the trust or amalgamation of the scheme. Winding up would have involved dissolving the scheme using available resources to settle its liabilities while amalgamation would result in the transfer of the scheme’s assets and liabilities to another medical aid or entity.
The special general meeting voted for amalgation with potential service providers, further making recommendations for the curator to publish an expression of interest requesting potential partners for proposals on acquisition of Symphony.
Symphony’s troubles came to light in early August when the Non-Bank Financial Institutions Regulatory Board (NBFIRA) placed Symphony Health Trust under temporary closure, which meant that the company was therefore suspended from registering new members. The regulator was acting on the medical aid provider’s failure to submit its audited books and also growing concerns from members and stakeholders who complained about Symphony’s failure to meet its obligations.
Things started taking a downward spiral when the medical aid’s Board of Trustees resigned from the board on the 7th of December. Without a Board of Trustees, Symphony was rendered incapable of carrying out its functions and objectives, resulting in the regulator appointing Maemo Mesotlo, Managing partner at MSD Mesotlo & Associates, as the curator to take care of Symphony’s operations.
The fate of Symphony’s future was sealed earlier this year when it was reported that Rose Tatedi, founder and Principal Officer of the medical aid, submitted a recommendation to NBIFRA for the scheme to be liquidated.
Tatedi who has had extensive experience in the financial services, with the latter years spent as the managing director of the largest medical aid administrator in the country, formed Symphony as a joint venture with 2cana Solutions in 2012. The relatively new medical aid provider in the tightly regulated industry started off on a good footing, with membership numbers increasing by more than 600 percent from 2013 to 2016. However there was significant decrease of over 40 percent during 2017 due to membership termination, probably triggered by the uncertainty surrounding the medical aid’s future following suspension by NBFIRA.
Despite the initial growth stages, it has since been revealed that the medical aid provider is in a precarious financial position. The curator presented a bleak status of Symphony’s financial position, acknowledging that the company was not a going concern. In accounting terms, this means that a company cannot sustain itself for the foreseeable future (at least 12 months).
According to the financial statements of the company, revenue increased over the years 2013 to 2016, however the gross profit generated was not sufficient to cover the operational requirements of the company, resulting in a deficit for each year. The balance sheet showed that the company had a negative working capital, with total liabilities standing at P9.2 billion and total assets at a paltry P572, 575, the company would not have been able to pay off its liabilities hence it was insolvent at each year.
In the latest meeting, the curator told the affected members that following an invitation for expression of interest in acquiring and administering of Symphony Health Trust, two reputable medical providers showed interest. However, only Pula Medical Aid Fund submitted a proposal. In their proposal, Pula offered to acquire only active and paid up members, and will not assume liabilities for those not transferring to Pula, administrative and operations liabilities. Furthermore, Pula reserves the right to determine a membership threshold to be acquired.
Symphony’s existing members that would join Pula will have to make full disclosures of their medical conditions as per the Fund Rules and administrative processes for new members. Pula will also conduct a due diligence exercise that will cover assessment of all relevant Symphony’s data and records prior to concluding the agreement with respect to the envisaged transaction.
The proposed transaction between Symphony and Pula is subject to approval by all relevant regulators, including NBFIRA and Competition Authority. The completion of the transaction is expected to take 60 days.