HCEG Healthcare Ent.

RNS Number:9434X
Healthcare Enterprise Group PLC
03 February 2006

         Healthcare Enterprise Group PLC (the "HCEG" or the "Company")

    Proposed cash placing, dis-application of statutory pre-emption rights,
                amendment to the Option Scheme and Notice of EGM

Introduction

Following the Company's announcement on 31 January 2006, Healthcare Enterprise
Group PLC, the international healthcare products group, has conditionally raised
approximately #3.4 million (before expenses) subject to, inter alia,
shareholders' approval (the "Placing"). As part of the Placing, the Directors
have agreed to subscribe, in aggregate, #580,000 to demonstrate their commitment
to the Company going forward.

The Placing

The Placing, principally with institutional shareholders and the Directors, is
of 9,371,430 Firm Placing Shares and 14,914,287 Conditional Placing Shares, all
at 14p per share. The Firm Placing Shares will be issued and admitted to trading
on AIM on or about 9 February 2006, provided the Placing Agreement is not
terminated prior to this date, but the issue of the Conditional Placing Shares
is conditional on the passing by shareholders of the Issue Authority Resolution,
which will give the Directors authority to disapply statutory pre-emption rights
in respect of the allotment of the Conditional Placing Shares.

At the Company's Annual General Meeting on 20 July 2005, shareholders passed
resolutions granting the Directors authority to allot 50,201,230 Ordinary
Shares, and disapplying the statutory pre-emption rights on new issues in
respect of 15,060,400 Ordinary Shares. The placing of the Firm Placing Shares,
together with the placing conducted in September 2005 and other relevant
allotments, renders the second of these authorities insufficient to allow the
placing of the Conditional Placing Shares to proceed without further shareholder
approval. Accordingly, the placing of the Conditional Placing Shares is
conditional on the passing by Shareholders of the Issue Authority Resolution.
The issue of the Firm placing Shares is conditional on the Placing Agreement not
being terminated prior to the Admission of such shares.

The Company is, therefore, proposing the Issue Authority Resolution, which is a
special resolution, to grant further authority to the Directors to allot shares
for cash without the application of statutory pre-emption rights. This
authority, if approved, will enable the Company to issue the Conditional Placing
Shares and, in addition, issue Ordinary Shares for cash with an aggregate
nominal value of up to #465,947, representing 10 per cent. of the nominal value
of the shares in issue following the allotment of the Placing Shares.

The reason for taking this new authority is to give the Directors flexibility to
raise cash by way of a private placement without having to implement a rights
issue or open offer which may be disproportionately expensive.

In consideration for arranging the Placing, Numis Securities Limited ("Numis
Securities") will be entitled to a commission of 4 per cent. of the value of
those Ordinary Shares placed by Numis Securities on behalf of the Company
(excluding the Ordinary Shares subscribed for by the Directors), amounting to
#112,800.

Use of proceeds

The net proceeds of the Placing (assuming the implementation of the Conditional
Placing), after costs estimated to be approximately #196,375, are expected to be
approximately #3.2 million. This sum will be used, in conjunction with the
Group's existing funds, to provide approximately #1.1 million of funding to
support (in the near term) HSS, an estimated #0.5 million to enable the Group to
satisfy its obligations under certain milestone contract payments and the
balance to ensure the Group has adequate resources to implement its business
plan. However, it should be noted that the continuing working capital position
of the Company for the next 12 months (taking into account the procees of the
Firm Placing together with the Group's banking facilities) is not, in the view
of the Board, dependent upon the sums being raised in the Conditional Placing,
which is subject to approval by Shareholders at the EGM.

Although the Placing represents a discount of 17.7 per cent. to the middle
market quotation as at 2 February 2006, the Directors consider this discount is
justified in order to raise the necessary funds to achieve these objectives.

Directors' interests in the Placing

Each of the Directors (and where relevant, their connected persons) have agreed
to subscribe under the Placing. In total, those Directors will acquire 4,142,858
Firm Placing Shares at the Placing Price. This represents approximately 2.2 per
cent. of the issued share capital as enlarged by the Placing, assuming the Issue
Authority Resolution is passed and the Conditional Placing Shares are allotted
("Enlarged Issued Share Capital"). Following completion of the Placing, the
Directors will collectively own or be interested in 34,695,413 Ordinary Shares
representing approximately 18.6 per cent. of the Enlarged Issued Share Capital.

Grant of share options to employees and members of the management team

The Directors consider that the efforts made by the reshaped management team and
the Group's staff since problems were initially identified at HSS have led to
good progress being made. In light of this, they believe that such efforts merit
recognition in a form that will continue to incentivise the management team and
employees to improve the Company's performance. To achieve this aim, a pool of
3.5 million Options has been created. It is intended to distribute part of this
pool among relevant staff shortly after the EGM. The grant of these Options,
together with those granted to the management team described below, will,
however, require the dilution limit in the Option Scheme  to be amended. This
will also allow the Company the flexibility to grant further Options in the
future. Shareholder approval is required to amend the dilution limit and
accordingly the Option Resolution is being proposed at the EGM. The effect of
the Option Resolution will be to allow the Company to put up to 13 per cent.
(rather than the current limit of 10 per cent.) of its ordinary share capital
under option (excluding Rollover Options and options granted prior to the Option
Scheme being adopted on 10 March 2003). In the event that the Option Resolution
is not passed,  the proposed grants may be scaled back.

In addition to the Options described above, the Company's Remuneration Committee
has  granted further Options to some of the Directors and senior members of the
management team to reflect the additional work and responsibilities that they
have been subject to in recent weeks, and to provide them with the appropriate
incentive to pursue and complete the recovery programme. The following grants of
Options have been made to management (or their connected persons):

Name                                             Number of Options

Mark Tompkins                                    1,000,000
Lyndon Gaborit                                   1,000,000
Nicholas Brigstocke                                500,000
Nigel Wray                                         250,000
Gordon Wood                                        250,000
Joe Considine                                      500,000
Other management and consultants                   850,000

Notice of EGM

A circular containing full details of the proposals set out in this announcement
has been posted to Shareholders today. Included within the circular is a proxy
card and a notice convening an EGM of the Company at 11:00 a.m. on 28 February
2006.

                                                                 3 February 2006

Enquiries:

Healthcare Enterprise Group PLC                    020 7351 7500
Mark Tompkins, Chairman
Lyndon Gaborit, Executive Deputy Chairman

College Hill                                       020 7457 2020
Adrian Duffield / Corinna Dorward


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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