Dear Shareholder

We last wrote to you on 3 January 2008, enclosing our Target Company Statement in relation to the takeover offer by Crescent Capital Partners for Abano Healthcare Group.

Although it has only been 11 days since this last communication, a lot has happened during this period.

Firstly, Crescent has been widely reported as being highly critical of your company, its business plan, its directors, and indeed of the Independent Expert’s report by KordaMentha that was sent to you. This is a well rehearsed strategy and we expect to see further attempted comment, criticism, critique and the like from Crescent and their advisor, as they will want to try and shake investor confidence and to try and acquire this strong growth company as cheaply as possible.

But secondly, and of more concern to investors, Crescent has renewed its attempts to buy your company by offering selected shareholders a separate deal to that offered to all shareholders. That deal has seen those shareholders paid now for their shares and includes an 'escalation clause' under which Crescent has agreed to pay them any amount by which Crescent increases the takeover offer price.  While these ‘selected’ shareholders have already received payment for their shares, all other shareholders have no certainty of sale and if you agree to the current offer, your shares will be locked up until either the takeover offer lapses if it is unsuccessful, or ultimately succeeds – the outcome of which may not be known until at least March.

Thus far, Crescent has spent $23m (unconditionally) to get to 19.9%. And this for a company of which they have been highly critical…one wonders what they would have done if they actually liked Abano.

I have attached to this letter a press statement released by the Abano directors over the weekend commenting on this activity, including our view that Crescent too sees value in our company and are desperate to acquire it.
I have also enclosed copies of articles in the Sunday Star Times on 13 January 2008 - an excellent analysis of the situation by commentator, Jenny Ruth, and also an interview with Abano’s managing director, Alan Clarke, in which he expresses his enthusiasm for our company and conviction in our business plans.

We now have a situation in which two parties each own 19.9% of Abano...each party having criticised the company's future plans, but each having aggressively attempted to gain control of Abano over the last few months.

The Crescent bid does not close until 29 February 2008. There is absolutely no hurry for you to do anything about it, and if you accept their offer, you will only limit your flexibility to deal with other approaches that may arise.

Our recommendation remains for you to reject the Crescent offer.

Alison Paterson
Chairman

 

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