Westminister Health Care gains 16% of Tamaris

Westminster Health Care, the UK's second-largest quoted nursing home company, is to take a 16 per cent stake in Tamaris, the fourth-largest company, as part of its plans to set up a US-style nursing home property finance company.

As part of a package of deals which will double its size, Tamaris will announce today that it has bought 12 nursing homes from Westminster worth pounds 20m. Tamaris will sell and immediately lease back and operate five of these homes from a new nursing home property company, Atlantic Healthcare Fund, set up jointly by Westminster and its former partner, Holiday Retirement of the US.

Atlantic Healthcare is being established as a rival to Omega, the huge US sale-and- leaseback nursing home specialist. Sale-and-leaseback financing means operators manage, but do not own, nursing home assets, and is proving highly profitable.

Tamaris will run the other seven Westminster homes through a similar arrangement with a property fund managed by Hamilton Corporate Finance. Tamaris will also announce today it has been appointed as sole operator of 70 of Omega's nursing homes. The Westminster and Omega deals more than double Tamaris' nursing home beds to 5,000.

The deal with Tamaris will involve Westminster buying pounds 500,000 worth of Tamaris' ordinary shares at 2.75p, 38 per cent above Tamaris' 2p closing price on Friday, and pounds 4m of its 7.2 per cent convertible and preference shares, together equivalent to around 16-17 per cent of Tamaris' equity. Westminster is expected to announce in the next few weeks that it is selling another pounds 20m of its homes to Atlantic, freeing up cash to expand its interest in psychiatric care.