Fortis shareholders give approval for stake sale to IHH
New Delhi: Fortis Healthcare said its shareholders have given nod to the acquisition of the domestic healthcare chain by Malaysia's IHH Healthcare.
The shareholders of Fortis Healthcare have by an overwhelming majority of 99.69 percent voted in favour of the issuance of equity shares on a preferential allotment basis.
They have also approved by 99.99 percent votes to reclassify members of promoter/promoter group to public shareholder category and classification of Northern TK Venture Pvt Ltd as a promoter.
The company had also sought nod from shareholders to reclassify Malvinder Mohan Singh; Malvinder Mohan Singh - Trust; Shivinder Mohan Singh; Harpal Singh, Abhishek Singh; Fortis Healthcare Holdings Pvt Ltd; Malav Holdings Pvt Ltd and RHC Holding Pvt Ltd from the 'Promoter and Promoter Group' shareholder category to 'Public' shareholder category.
It had asked shareholders to approve classification of Northern TK Venture Pte Ltd as 'Promoter' subsequent to the completion of the preferential allotment of equity shares.
On July 13, the Fortis Healthcare board had approved an Rs 4,000-crore offer from IHH Healthcare for 31.1 percent stake in it, valuing the cash-strapped firm at Rs 8,880 crore.
The transaction, to be carried out via IHH Healthcare's arm Northern TK Venture Pte Ltd, was to be followed up by an open offer for an additional 26 percent stake in Fortis.
IHH Healthcare is expected to shell out a total of Rs 7,300 crore to acquire 57.1 percent stake, provided its open offer for 26 percent stake is fully subscribed.
The deal is expected to bring relief to the cash-strapped Fortis. It is reported that the company Fortis posted a net loss of 707.4 million rupees ($10 million) for the three months ended June 30 and has now been in the red for five of the last six quarters, as it struggled with a cash crunch, rising debt, and other problems.
However, it said occupancy rates at its hospitals had risen to over 69 percent currently, from 62 percent in the quarter through June.
The first quarter loss reversed a 52.9 million rupee profit in the same period a year earlier, and income from operations fell 9.9 percent in the first quarter from a year earlier to 10.4 billion rupees.
“...The last quarter performance has been impacted severely due to the continuing challenges that the company had been facing over the last 18 months that have led to liquidity issues,” Chief Executive Bhavdeep Singh said in a statement.
The company said it aims to reach average occupancy levels for its hospital business of over 70 percent by the fourth quarter of fiscal 2019.