AVEO GROUP TO BUY BACK SHARES FOLLOWING MEDIA INVESTIGATION

AVEO GROUP TO BUY BACK SHARES FOLLOWING MEDIA INVESTIGATION

FOLLOWING last night's Four Corners report which revealed accusations against Aveo Group (ASX: AOG) of financially mistreating its elderly residents, the aged care provider today announced it will launch a share buy-back scheme upon the consent of lenders.

Aveo intends to conduct an on-market buy-back of as many as 54 million ordinary shares, of which there are currently more than 581 million on issue.

The buy-back arrangement is expected to run for a total of 12 months and Aveo Group has cited "ongoing capital management" as its reason.

Yesterday Aveo's share price toppled more than 11 per cent before the Four Corners joint investigation with Fairfax Media went to air last night.

The joint investigation revealed stories of financial loss experienced by some of the residents in Aveo retirement villages who are not given adequate support from "underfunded" consumer affairs bodies.

At the centre of the report, Four Corners spoke with residents and former residents and revealed the contracts they signed which include specific clauses relating to property sales and ongoing fees.

These contracts have been described by lawyers and consumer advocates as "complex" and "rapacious".

The news partnership also spoke to current and former residents as well as their children, lawyers, former Aveo staff and lobby groups to substantiate its evidence.

In a release to the market yesterday, Aveo responded publicly to the 29 questions it was asked by journalists during the joint investigation.

The questions included why Aveo Group's exit fees, or "deferred management fees", varied between individual contracts and why formers residents were still being charged maintenance fees after they left the villages.

The journalists also inquired about Aveo's property valuation scheme, and why there have been reported cases where residents have been waiting years to sell properties which have been valued at less than the median market or purchase price.

In response to the 29 questions, Aveo said it is trying to simplify and standardise the contracts it has with residents, and that the exit fee on new contracts is 35 per cent of the purchase price if the resident leaves after three years.

"Aveo also conducts regular customer satisfaction surveys with its own villages to gather feedback and provide improvements to the service being provided to residents," Aveo CEO Geoff Grady said as part of the ASX statement.

Grady said the company's latest national survey shows that 89 per cent of residents feel safe and secure in their village, 87 per cent agreed that they are confident they will receive prompt emergency attention via the emergency button and more than 90 per cent believe staff to be respectful and willing to help.

Aveo owns and operates 89 retirement villages across Australia with a total of 11,014 units and more than 13,000 residents.

Aveo Group shares are currently trading at $2.68, down a further 1.1 per cent.

Never miss a story: Sign up to Business News Australia's free news updates

Follow us on Twitter, Facebook, LinkedIn and Instagram

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Advertisement

Related Stories

Woolies exec Paul Graham named new Australia Post CEO

Woolies exec Paul Graham named new Australia Post CEO

Woolworths (ASX: WOW) chief supply chain officer Paul Graham has ...

Booktopia strikes Zookal deal to boost education sales

Booktopia strikes Zookal deal to boost education sales

After hitting a new record for educational book sales as universi...

Vitamins brand VOOST acquired by Procter & Gamble

Vitamins brand VOOST acquired by Procter & Gamble

Australian maker of effervescent supplements VOOST has been acqui...

Quarantine-free travel to WA effective for all Australian states from 19 April

Quarantine-free travel to WA effective for all Australian states from 19 April

Western Australia will soon be able to welcome any interstate tr...