Ramsay Health Care Limited
Convertible Adjustable Rate Equity Securities (CARES)

Summary

On 19 April 2005, Ramsay Health Care Limited announced that it proposed to raise up to A$260 million through an issue of Convertible Adjustable Rate Equity Securities (CARES) to partly fund the acquisition of Affinity Health.

CARES are redeemable, convertible preference shares with a face value of $100 that entitle holders to non-cumulative dividends.

The offer successfully closed on the 17 May 2005, with the issue of 2,600,000 CARES on 24 May 2005.

Summary of CARES Terms and Conditions

The CARES Terms of Issue are set out in Appendix A of the Prospectus issued on 19 April 2005. The information below is a summary only and should be read in conjunction with the information contained in the Prospectus.

Prospectus for 1 for 9 Entitlement Offer

Dividends

The Holder of each CARES is entitled to a preferred, non-cumulative, floating rate dividend calculated as:

Dividend Entitlement = Dividend Rate x Face Value x N / 365

Where:

• The Dividend Rate (see details below)
• The Face Value is $100
• N is the number of days in the Dividend Period

The payment of Dividends is at the Directors’ discretion and is subject to there being funds legally available for the payment of Dividends and the restrictions which apply in certain circumstances under the financing arrangements summarised in Sections 9.13 and 9.14 of the Prospectus.

If declared, Dividends will be payable in arrears on each 20 April and 20 October until CARES are converted or exchanged.

See clause 2.4 of the Terms of Issue in Appendix A of the Prospectus.

The Dividend Rate

The Dividend Rate for each Dividend Period is calculated as:

Dividend Rate = (Market Rate + Margin) x (1 – T)

Where:

• The Market Rate is the 180 day Bank Bill Swap Rate applying on the first day of the Dividend Period expressed as a percentage per annum.
• The Margin for the period to 20 October 2010 is 2.85% as determined by the Bookbuild held on 26 April 2005.
• T is the prevailing Australian corporate tax rate applicable on the Allotment Date.

Note: If CARES are not converted or exchanged by 20 October 2010 the Margin will be increased by a one-time step-up of 2.00% (200 basis points) per annum.

Margin Step-up

One-time 2.00% (200 basis points) step-up in the Margin at 20 October 2010

Franking

Ramsay expects the Dividends paid on CARES to be fully franked. If a Dividend is not fully franked, the Dividend will be grossed up to compensate for the unfranked component.

If, on a Dividend Payment Date, the Australian corporate tax rate differs from the Australian corporate tax rate on the Allotment Date, the Dividend will be adjusted downwards or upwards accordingly.

See clauses 2.2 and 2.3 of the Terms of Issue in Appendix A of the Prospectus.

Conversion or Exchange by Ramsay

CARES have no maturity. Ramsay may convert or exchange some or all CARES for Shares or $100 in cash for each CARES, by giving notice to the holders (at least 21 business days) prior to the 20 October 2010 or at any Dividend Payment Date thereafter.

Ramsay also has the right to:

• convert or exchange CARES after the occurrence of a Regulatory Event; and
• convert CARES on the occurrence of a Change in Control Event.

Ramsay cannot elect to convert or exchange only some CARES if such conversion or exchange would result in there being less than $50 million in aggregate Face Value of CARES on issue.

See clauses 3.2 and 3.5 of the Terms of Issue in Appendix A of the Prospectus.

Conversion Ratio

The rate at which CARES will convert into Shares will be calculated by reference to the market price of Shares during the 20 Business Days immediately preceding, but not including, the conversion date, less a conversion discount of 2.5%. An adjustment is made to the market price calculation in the case of a Change in Control Event. The Conversion Ratio for each CARES will not be greater than 400 Shares.

See clauses 3.6 – 3.9 of the Terms of Issue in Appendix A of the Prospectus.

Ranking

CARES rank equally amongst themselves in all respects and are subordinated to all creditors but rank in priority to Shares.

Participation

Unless CARES are converted into Shares, CARES confer no rights to subscribe for new Shares in any fundraisings by Ramsay or to participate in any bonus or rights issues by Ramsay.

Voting Rights

CARES do not carry a right to vote at general meetings of Ramsay except in limited circumstances.

See clause 5 of the Terms of Issue in Appendix A of the Prospectus.