Westminster comes right with second cash call

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The Independent Online
It was second time lucky for Westminster Healthcare, the nursing home operator, which accompanied full-year figures with a one-for-four rights issue to raise pounds 33.7m.

Last February, its shares tumbled after it failed to get a cash call away, reportedly because its largest shareholder refused to back the issue.

There were no such problems yesterday as new advisers Baring Brothers persuaded NME Cayman, Westminster's former parent, to take up its rights on its 42 per cent remaining stake. Its support allays fears that NME was planning to dispose of the rump of its holding.

In keeping with the rest of the fast-growing nursing home sector, Westminster needs the funds to meet accelerating demand for residential care. The nursing home market in the UK is thought to account for pounds 8bn of total healthcare spending of about pounds 50bn.

Since it was floated two years ago, the company has spent pounds 63m on its core nursing home operation. Last year bed numbers rose 20 per cent to a total of 4,748. A further 500 beds are under development and Westminster plans to operate 5,700 by the end of the current financial year.

The issue price of 270p compares with Wednesday's close of 313p. Unusually, the shares closed 7p higher yesterday at 320p as the market warmed to news of the rights and strong growth in profits and the dividend for the year to May. Having floated at 260p in 1993, they peaked at 396p at the beginning of 1994.

After a 38 per cent rise in turnover to pounds 69.5m, profit before tax jumped 23 per cent to pounds 13.8m. Earnings per share growth of a fifth to 22.5p was matched by the rise in dividend payout from 4.5p to 5.4p.

As well as funding the continuing increase in Westminster's beds, the proceeds will be used to back diversifications into three related areas: brain injury rehabilitation, acute care provision and diagnostic imaging. The company believes there are likely to be more acquisition opportunities in these areas.