Nestor sells unit for 37 mln pounds

LONDON (Reuters) - Nestor Healthcare Group (NSR.L) is to sell its Carewatch unit for 37 million pounds cash.

The plan will be put to shareholders at a meeting on Oct 2.

The company, which provides staff for the healthcare sector, said in a statement on Monday that the gross proceeds represent a multiple of 11.9 times last year's after tax profit.

Last November, the company's shares fell 60 percent in a week after it issued a profit warning when expected government contracts failed to materialise.

The Carewatch unit has been bought by a company controlled by Lyceum Capital, a private equity partnership focused on investment in mid-market businesses.

Nestor said the sale would allow it to repay a substantial amount of its outstanding bank debt.

In connection with the sale, Nestor said it has revised its bank facilities.

The company says it expects the net proceeds of the sale to be tax free because of tax losses.

"The disposal will allow Nestor to significantly strengthen its balance sheet and allow management to increase its focus on growth in the continuing Social Care and Primary Care businesses of the group," said Chairman John Rennocks.

(Reporting by Ben Deighton, editing by Rory Channing)

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