Streamlining an African healthcare group’s structure

Client Overview

A healthcare group approached us with a complex ownership structure spanning multiple African countries. Among their challenges was resolving a dispute with a company in which they held a minority stake. Additionally, they owned minority interests in this company’s subsidiaries across different African countries, creating layers of interconnected financial and tax considerations.

Specialist Services Used:

Goals

  • Simplify and streamline the group’s complex cross-border structure to enhance operational efficiency. 
  • Negotiate an exchange of minority interests in the company’s subsidiaries for an increased stake in the parent company.
  • Resolve the dispute between the parties involved, aligning the resolution with the client’s commercial objectives.
  • Avoid triggering significant tax costs in the process, especially across multiple jurisdictions.
  • Advise on the allocation of consideration received, optimising tax outcomes across disputed items, including the existence of loans, contributions to subsidiary funding, and redemption of preference shares.

Our Recommendations

Working closely with the healthcare group, we focused on three key areas:

01.

Asset and Liability Valuation – We thoroughly evaluated assets and liabilities across subsidiaries to accurately reflect their market value and align with the client’s business intentions.

02.

Capital gains tax application across jurisdictions – We analysed capital gains tax rules in the Ivory Coast, Ethiopia, Tanzania, and Mauritius, applying them carefully to the client’s situation to avoid unexpected tax liabilities.

03.

Precise Contractual Structuring – We recommended drafting contractual agreements that clearly articulated the parties’ intent, preventing any accidental tax liabilities from arising due to ambiguous language.

Additional Challenge

Intercompany Loan Restructuring

The healthcare group also faced challenges with intercompany loans to subsidiaries in several African countries, many underperforming and unable to service their debt.

To address this, we:

  • Evaluated the tax consequences of leaving the loans as-is, identifying risks associated with the non-performing loans.
  • Proposed restructuring strategies to mitigate tax risks, improve balance sheet health, and enhance the financial viability of each operating subsidiary.

Outcomes (To Date)

The healthcare group is positioned to finalise the asset swap and dispute settlement without incurring unplanned tax costs, ensuring all agreements align with their commercial goals. Additionally, loan restructuring has improved the financial standing of the group’s subsidiaries, supporting a healthier overall balance sheet.

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