NOTICE OF SPECIAL MEETING SPECIAL MEETING OF ABANO HEALTHCARE GROUP LIMITED SHAREHOLDERS TIME AND DATE: FRIDAY 13 JUNE 2014 AT 10AM VENUE: PAKURANGA HUNT ROOM, ELLERSLIE EVENT CENTRE, ELLERSLIE, AUCKLAND This is an important document and requires your URGENT ATTENTION. Your vote is VERY IMPORTANT. You are encouraged to either attend the Special Meeting and vote, or appoint a proxy to attend and vote at the Special Meeting on your behalf. If you intend to appoint a proxy, please complete and return your proxy form as soon as possible to ensure that your vote counts. Your Directors (other than Trevor Janes, who abstains) recommend you VOTE AGAINST THE RESOLUTION to remove Trevor Janes as a Director of the Company.
CONTENTS NOTICE OF MEETING 1 EXPLANATORY NOTES 2 INFORMATION ON TREVOR JANES 4 IMPORTANT INFORMATION ON VOTING 5
NOTICE OF MEETING Notice is hereby given that a Special Meeting of shareholders of Abano Healthcare Group Limited (the Company") will be held in the Pakuranga Hunt Room, Ellerslie Event Centre, 8 100 Ascot Avenue, Ellerslie, Auckland on Friday 13 June 2014, commencing at 10.00 am. REQUISITION The Special Meeting was requisitioned under section 121(b) of the Companies Act 1993 by the registered shareholder of interests associated with Peter Hutson and by James Reeves. PARKING Free parking is available on-site at Ellerslie Event Centre. AGENDA The business of the Special Meeting will be to consider and, if thought fit, pass the following Resolution which has been proposed by interests associated with Peter Hutson and by James Reeves. That Trevor Janes be removed from office as a Director of Abano Healthcare Group Limited with immediate effect. The Directors of the Company (other than Trevor Janes, who abstains) UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE AGAINST THE RESOLUTION We encourage you to read the Explanatory Notes which commence on page 2. ATTENDANCE AND PROXIES Your vote at the Special Meeting is VERY IMPORTANT. If you cannot attend the Special Meeting, you are encouraged to appoint a proxy to attend and vote on your behalf. Instructions on how to appoint a proxy are set out in on pages 5 and 6, and on the Proxy/Voting Form enclosed with this Notice of Meeting. If you intend to appoint a proxy, please complete your proxy form online or return your proxy form to Computershare as soon as possible to ensure that your vote counts. Proxy forms must be received by 10.00 am on Wednesday 11 June 2014 in order to be valid. By Order of the Board of Directors Richard Keys Authorised Officer 23 May 2014 1
EXPLANATORY NOTES BACKGROUND 1. On 20 July 2013, Archer Capital and interests associated with Peter Hutson and James Reeves presented to the Board a non-binding, conditional and indicative proposal to acquire all of the shares in the Company by way of a scheme of arrangement. Under this proposal, Peter Hutson, a Director on the Abano Board at that time, would have acquired Abano s 50% share in the joint venture audiology business, for "nominal consideration" 1. 2. The Board unanimously rejected this proposal for the following reasons: The indicative price substantially failed to reflect Abano s value or prospects. A scheme of arrangement, which requires a lower level of shareholder approval to succeed in comparison to a takeover offer, was not in the best interests of all shareholders. The indicative price did not warrant granting an exclusive period of dealing and due diligence, particularly to a party with a long stated aspiration to enter the dental sector (i.e. with the potential to become a competitor). The proposal would have provided Peter Hutson and James Reeves with additional value and investment opportunities that would not be available to any other shareholders. Peter Hutson would have acquired Abano's 50% share in the audiology business for "nominal consideration". This was valued at $12.9 million in Abano s financial statements for the year ended 31 May 2013. These accounts were approved by Peter Hutson as a Director of the Company. 3. Due to clear conflicts of interest, in September 2013, the Board asked for Peter Hutson s resignation as a Director of the Company. 4. On 28 November 2013, following the presentation at the Annual Meeting of an independent valuation from Grant Samuel, which valued the Company at $8.30 to $10.05 per share for full control of the Company, the Hutson/Reeves/ Archer Capital consortium withdrew its proposal. 5. Following their failed takeover attempt of Abano, Peter Hutson and James Reeves have continued their misleading communications campaign. They have stated their desire for a "suitably aligned chairman" 2 and have now begun a personal attack on members of the Company's Board and management, in particular, Chairman Trevor Janes. 6. On 6 May 2014, a Special Meeting of shareholders was requisitioned by interests associated with Peter Hutson (on behalf of registered shareholder ASB Nominees Limited) and by James Reeves (who is a registered shareholder in his own name). 7. Once the Company received a valid requisition notice, the Company proceeded promptly to convene a Special Meeting in accordance with the requirements of the Company s constitution, the Companies Act 1993 and the NZX Main Board Listing Rules. This involved the Company obtaining NZX approval to the form of this Notice of Meeting and the Company giving not less than 10 Working Days notice of the Special Meeting consistent with applicable legal requirements and practice for previous meetings of the Company s shareholders. PURPOSE OF THE SPECIAL MEETING 8. The purpose of the Special Meeting is to consider the Resolution put forward by interests associated with Peter Hutson and by James Reeves to remove Mr Trevor Janes as a Director of the Company. The Directors of the Company (other than Trevor Janes, who abstains) UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE AGAINST THE RESOLUTION TREVOR JANES 9. Trevor Janes is a very experienced, highly regarded and respected Director. The Company has been privileged to have Trevor as a Director since September 2005. He has led the Board as the Company s Chairman for the last two and a half years, taking over from Dame Alison Paterson when she stepped down as Chairman in November 2011. 2
10. Trevor has been an integral part of the Board as the Company s very successful healthcare investment strategy has been developed and implemented. 11. During Trevor s time as a Director, more than $74 million has been returned to shareholders in dividends and capital returns. Since 2006, when the Company s current four sector strategy was initiated, shareholders have received an average gross annual return of 34.7%, compared to an NZX50 gross return of 4.6% over the same period. This is an Internal Rate of Return of 56.2% as at 31 March 2014 3. Without reinvesting dividends or capital returns, 1,000 shares acquired on 31 May 2006 for $970, would have provided $8,243 of value by 31 March 2014. 12. The Company s performance record has received a number of awards - for growth strategy, operational performance excellence and as a leading communicator to shareholders, the market and investors. 13. Trevor was re-elected as a Director by shareholders in November 2013. Excluding those votes associated with interests of Peter Hutson and James Reeves, Trevor received 87% of shareholder votes in his favour. If those votes are included, Trevor received 56% of shareholder votes in his favour. 14. In line with Board protocol, the Chairman of the Company stands for election annually. Trevor has been elected Chairman by the Company's Directors annually since his Chairmanship began. 15. Further information on Trevor Janes is set out on page 4. CONSEQUENCES OF YOUR VOTE 16. If the Resolution is passed, Trevor Janes will cease to be a Director of the Company with immediate effect. As Trevor is the Chairman of the Board, the Board will be required to elect a new Chairman. 17. If the Resolution is rejected by shareholders, Trevor will continue as a Director of the Company and as Chairman of the Board. 18. The Board considers that a VOTE AGAINST THE RESOLUTION is in the best interests of the Company and shareholders. Accordingly, the Directors of the Company (other than Trevor Janes, who abstains) UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE AGAINST THE RESOLUTION. 19. The Board believes that the Resolution is not just about whether Trevor Janes remains in office as a Director and Chairman, but about the future control and direction of the Company. The Board urges you to VOTE AGAINST THE RESOLUTION if you want to show that: You support the Board and its strategy. You do not support Hutson and Reeves continued attempts to control the Company without making a formal Takeovers Code compliant takeover offer that is open for acceptance by all shareholders on the same terms. You urge Hutson and Reeves to stop their destructive campaign, which risks eroding the value of all shareholders investment in the Company and is a waste of shareholder money. 20. You are encouraged to: Either attend the Special Meeting and vote Or appoint a proxy to attend and vote at the Special Meeting on your behalf. Instructions on how to appoint a proxy are set out on pages 5 and 6. 21. If you intend to appoint a proxy, please complete and return your proxy form as soon as possible to ensure that your vote counts. 22. Proxy forms must be received by 10.00 am on Wednesday 11 June 2014 in order to be valid. 23. You are encouraged to read the Warning against proxy solicitation on page 5. That warning sets out important information regarding the appointment of a proxy to vote on your behalf at the Special Meeting. Please only appoint someone to represent you as your proxy holder if you trust them to convey your wishes and voting instructions at the meeting. 1 Source: Non-binding, indicative proposal dated 19 July 2013. 2 Source: Letter from Healthcare Industry Limited and Steamboat Capital Limited dated 10 April 2014. 3 Assuming reinvestment of all dividends and capital returns. Figures are not adjusted for inflation. 3
TREVOR JANES Trevor joined the Company s Board on 23 September 2005 and has been Chairman of the Board for the last two and a half years since 7 November 2011, when he took over from Dame Alison Paterson. Trevor is a very experienced and highly respected director. He holds a number of other board positions in Government organisations, listed companies and private businesses. He was recently appointed as a director and deputy chair of Accident Compensation Corporation and is also a director of ProCare Health Limited. He is a member of the New Zealand Markets Disciplinary Tribunal, the New Zealand Post Network Access Committee and the International Development Advisory and Selection Panel for the Ministry of Foreign Affairs and Trade. Trevor has also held a large number of prior governance roles, including as chair of Public Trust, deputy chair of Mighty River Power Limited, director of Watercare Services Limited and on the Board of the Auckland District Health Board. In 2005, he was also a director of Capital + Merchant Finance Limited for a period of just over a year and a half. Although this company was ultimately placed in receivership (and later liquidation), the receivership occurred over a year after Trevor resigned from that company s board, and Trevor has not been the subject of any of the litigation that has subsequently involved that company. Prior to becoming a professional director, Trevor had a career in investment banking and financial analysis. His expertise in this area, as well as his experience in the health sector, is of immense value to the Company as it continues to invest and deliver on its long term growth strategy. QUALIFICATIONS AND PROFESSIONAL MEMBERSHIPS Trevor is a Fellow Chartered Accountant of NZICA, a Fellow of the Institute of Directors and a Fellow of the Institute of Financial Professionals NZ Inc. He is also a member of the CFA Institute (USA) and the UK Society of Investment Professionals. INDEPENDENCE Trevor Janes is an independent Director of the Company. Notably, prior to the Special Meeting: A complaint was lodged with the NZX, which the Company believes was at the behest of interests associated with Hutson and Reeves, alleging that Trevor was not, and is not, an independent Director, due to being a director of Accident Compensation Corporation which owns more than 5% of the Company s shares. In the Company's view, the complaint was without merit. NZX subsequently advised that it did not propose to take any action. The NZX granted a class waiver relating to director independence requirements in respect of all directors of Accident Compensation Corporation. That class waiver was sought by, and granted in favour of, Accident Compensation Corporation and not the Company. The Company s Board has decided that it will treat Trevor as being subject to the class waiver and will elect to rely on it for future director independence matters. Importantly, the class waiver has no relevance for, and does not affect, Trevor s ability to consider corporate activity (such as the failed takeover proposal from Archer Capital and interests associated with Peter Hutson and James Reeves, and any further activities of this nature). Further, the class waiver has no impact on Accident Compensation Corporation s ability to vote on any matter, including on the appointment/removal of the Company's Directors. A complaint was lodged by interests associated with Mr Hutson with the NZX alleging faults in the accuracy, timeliness and independence of the Grant Samuel report released by the Company at its November 2013 Annual Meeting which indicated the value of the Company was significantly higher than the unsolicited, indicative, nonbinding and conditional proposal from Archer Capital, together with interests associated with James Reeves, and with Peter Hutson. In the Company's view, the complaint was without merit. NZX subsequently advised that it did not propose to take any action. Since that time, the Company understands that Hutson and Reeves have raised substantively the same complaints again with NZX. The Company continues to believe they are without merit. 4
VERY IMPORTANT INFORMATION VOTING Voting at the Special Meeting will be by a poll of shareholders entitled to vote and voting at the meeting. A Voting/Proxy form is enclosed with this Notice of Meeting. If you attend the Special Meeting, please bring this form with you as it also constitutes your voting paper. WHO CAN VOTE The only persons entitled to vote at the Special Meeting are registered shareholders as at 5.00pm on Tuesday 10 June 2014. Only the shares registered in those shareholders names at that time may be voted at the Special Meeting. HOW YOU CAN VOTE Abano shareholders can vote in any one of the following ways: In person By proxy By representative (if the shareholder is a body corporate) IF YOU WANT TO VOTE BY PROXY Any shareholder who is entitled to vote at the Special Meeting may appoint a proxy to attend and vote on their behalf. A proxy does not have to be a shareholder in the Company. A shareholder may appoint the Chairman of the Meeting, or another person, to act as proxy. Trevor Janes will not act as Chairman of the Meeting for that part of the Special Meeting that deals with voting on the Resolution that has been requisitioned. If you appoint a proxy, you may either direct your proxy how to vote for you or you may give your proxy discretion to vote as s/he sees fit. If you wish to give your proxy discretion, then you must mark the appropriate box to grant your proxy that discretion. If you do not tick any box, or the form is otherwise unclear, then your instruction will be to abstain. If you mark more than one box on an item your vote will be invalid. The Chairman of the Meeting and the Company s Directors intend to vote proxies marked Proxy Discretion AGAINST THE RESOLUTION. If no direction or no discretion is given, then the Chairman of the Meeting and the Directors will abstain. HOW TO APPOINT A PROXY A shareholder wishing to appoint a proxy can do so as follows: Online in accordance with the instructions set out in the enclosed Proxy/Voting Form Or by completing the enclosed Proxy/Voting Form and returning it by mail or fax to Computershare Investor Services Limited, to the address details set out below, so as to ensure it is received by 10.00 am on Wednesday 11 June 2014 (being 48 hours before the time for holding the Special Meeting). Joint holders should all sign the form. Computershare Investor Services Limited, Private Bag 92119, Auckland 1142 Fax +64 9 488 8787 Any corporation that is a shareholder may appoint a person as its representative to attend the Special Meeting and vote on its behalf, in the same manner as that in which it could appoint a proxy. A proxy granted by a corporation must be signed by a duly authorised officer or attorney, who must be acting with the corporation s express or implied authority. WARNING REGARDING PROXY SOLICITATION You may be approached by persons seeking to solicit proxies on behalf of Peter Hutson, James Reeves or the interests they represent. You should be very careful that you do not inadvertently provide your proxy to those persons, unless you clearly intend to do so. 5
If you wish to keep Trevor Janes as a Director and cannot attend the Special Meeting, then the best course of action is to: Provide your proxy in favour of the Chairman of the Meeting AND Direct your proxy to VOTE AGAINST THE RESOLUTION. PRECEDENCE OF PROXIES If a shareholder lodges a valid proxy and subsequently lodges a further valid proxy, the first proxy will be deemed to be cancelled and only the second proxy will be effective. REQUIRED VOTES In order for the Resolution to be passed, it must be approved by more than 50% of the votes of those shareholders entitled to vote and voting on the resolution, in person or by proxy. There are no voting restrictions for the Resolution. SUMMARY OF PROCEEDINGS A summary of the proceedings will be available as soon as practicable following the close of the Special Meeting and will be released to the NZX and available on the Company website www.abanohealthcare.co.nz. 6