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MUMBAI: Fortis Healthcare Limited on Tuesday said it has signed a definitive agreement to acquire the entire portfolio of assets of RHT Health Trust listed in Singapore. The proposed transaction involves the acquisition of all the securities of RHT’s entities for an enterprise value of Rs 4650 crore, which includes Rs 1152 crore of debt that will be repaid, Fortis said in a statement to the stock exchanges. It further added that substantial part of the net proceeds from the deal received by RHT will be distributed to its unit holders, including Fortis.
“Fortis believes that the proposed transaction will potentially enhance value for all its stakeholders. With the unwinding of the current structure, it would also make it easier for investor and other stakeholders to better understand the Company’s business and financial performance,” the company said in a statement. Upon completion of the securities acquisition Fortis believes that the service fees that it was paying will be completely eliminated which would significantly improve its operating profitability and cash flows. The proposed transaction is expected to have positive impact on its operating profit by Rs 270 crore.
Fortis board had approved restructuring of its assets aimed at consolidating the entire Indian asset portfolio (12 clinical establishments, 4 greenfield clinical establishment and 2 operating hospitals).
Billionaire brothers Malvinder and Shivinder Singh controlled Fortis Healthcare has been facing heat for the last few days after a Bloomberg report said that the brothers took out at least Rs 500 crore ($78 million) out of the publicly-traded hospital company they controlled without board approval about a year ago. This decision is believed to have forced Fortis’s auditor, Deloitte Haskins Sells LLP, to refuse to sign off on the company’s second-quarter results until the funds were accounted for or returned. Fortis Healthcare denied these reports and said a wholly owned subsidiary of the company had deployed funds in secured short-term investments with companies in normal course of treasury operations. These loans were adequately secured and the repayment has since commenced as per the agreed payment schedule. The company also denied that the auditors had refused to sign the second quarter results.
These reports emerged a day after both the brothers decided to step down from the board of Fortis Healthcare after they lost a litigation with Japanese drug maker Diiachi Sankyo in an arbitration suit regarding Ranbaxy pharma, the erstwhile company owned by Singh brothers. The Delhi High court has asked the brothers to pay Rs 3700 cr to Diiachi in this case.
On Monday, rating agency ICRA downgraded the company’s rating to A2 keeping the company on watch with negative implications.
On Tuesday’s trade shares of Fortis closed at Rs 139 down by 6%.