VETERINARY NEWSLETTER

March 2019

The Cenversa Share Offer and Bonus Share Offer

The Cenversa Share Offer and Bonus Share Offer
Veterinary supplier Cenversa has announced a share offer to raise $8 million for expansion purposes.  The offer includes a significant bonus component.

The offer is priced at 80 cents per share, the ruling price in recent transactions.  However, there is a big sweetener:- 

• Veterinary practice owners who pledge to make 75% of purchases off Cenversa for three years will receive three bonus shares for each ten shares purchased with a minimum purchase of $4,000 of shares, i.e. 5000 shares.  The bonus shares must be held for three years.
• Large investors who purchase 300,000 shares, i.e. $240,000 worth will also receive three bonus shares for each ten shares purchased but the bonus shares cannot be sold for three years.

Depending on market conditions the principle shareholder and Managing Director, Lionel Bloom is planning an IPO and stock market listing in about three years, but I observed that these plans can be captive of wider economic events.  The stock market has to be in a healthy state to achieve a good IPO and listing.  Those veterinarians interested in purchasing shares can contact the Company Secretary, Tracey West (tracey.west@cenversa.com.au).

VetShare Limited
An Independent Vet Service Australia (IVA) Pty Ltd its subsidiary declared a tiny profit of $62,505 for the half year to 31 December 2019 representing earnings of $0.01 per share.  While it falls short of blowing the roof off it does as least offer a tiny speck of hope for its long suffering shareholders.

Greencross Limited
Greencross Limited has been purchased by a private equity group.  It will be indeed be interesting to see what it does with its veterinary practices as the expectation is that they will be separated from the Pet Barn style business and maybe sold off.  That of course is speculation.  Since the buyers would have been well aware of the veterinary staffing difficulties in the veterinary profession and the problems that a significant number of veterinary practices were having, it must be assumed that there is a bigger plan in place.

Relationships
Veterinary practice is a relationship business and it is one area of business where well run privately owned practices run by their owners have a big natural advantage over corporate practices if they building strong relationships with their clients.

Recently, veterinary recruitment business, Kookaburra, was quoted as indicating that it had a multitude of unfillable veterinary vacancies.

Privately owned veterinary practices with active vets, preferably with two partners, have a huge natural advantage over corporate practices with staffing difficulties.

Another Corporate Collapse
We have written in the past as to how professional practice consolidations often don’t turn out well and the present state of some of the veterinary companies indicate that there problems.

A recent example from the dental profession is of a company called Smile Inclusive Ltd which has its initial public offer in May 2018 priced at $1.00 per share then briefly touched $1.18 on the stock market before sliding to 0.29 cents.  Last week it crashed to 13.5 cents after a comment at the bottom of its half yearly results revealed that it had breached its banking covenants.  A director had also resigned during the week.

We are guessing that it’s not a happy place and at time of writing it was suspended from trading on the stock market.

Best wishes to all Vets,

Graham Middleton

Disclaimer

The information contained herein is of a general nature and no specific action should be taken without individual advice.  Speak with Synstrat staff as appropriate.

Prepared by Synstrat Management Pty Ltd for clients of the Synstrat Group.

Synstrat Management Pty Ltd is the holder of Australian Financial Services Licence number 227169.

The Synstrat Group consists of two companies, Synstrat Accountinvg Pty Ltd and Synstrat Management Pty Ltd.  The two companies are owned in parallel by the Synstrat partners who are directors of both companies.