Georgia Healthcare Group Sells 40% equity Interest in High Technology Medical Centre University Clinic

On 19 August 2020, GHG signed a Sales and Purchase Agreement to sell a 40% equity interest in High Technology Medical Centre University Clinic ("HTMC") to Tbilisi State Medical University, which intends to use it as a teaching platform (the "Sale").

Total cash consideration for the Sale, which is subject to regulatory approvals, is US$ 12 million (GEL 36.8 million). Due to the HTMC's current shareholding structure (GHG owns 50%, while the other 50% is held by an individual shareholder and current CEO of the hospital ) GHG has had less control over the Hospital's operations. GHG intends to sell the remaining 10% equity interest in the coming months.

 HTMC had a 13.0% and 9.8% share in the total healthcare business' assets and EBITDA, respectively, in 2019. The Sale is in line with GHG's strategy to divest low-return generating assets.

HTMC is one of the lowest return generating assets across GHG's hospital portfolio with a FY19 ROIC of 3.4%. The divestment, therefore, materially improves the Healthcare business ROIC - on a pro-forma basis, increasing FY19 healthcare business ROIC by 90bps. GHG intends to use proceeds from the Sale to reduce its net debt position and improve its leverage ratio, where the cost of GEL-denominated debt is approximately 11.5%.