The truncated board of directors of FortisNSE 0.24 % Healthcare met on Wednesday, after four directors either resigned or were voted out, to initiate the process for considering all the bids that were submitted earlier for the hospital chain, said two people familiar with the development.
If the board decides to re-examine the bids, it would render infructuous the May 10 decision to recommend the Munjal-Burmans bid to shareholders for approval.
The board is likely to consider all proposals — including both binding and non-binding bids — with a limited time period for due diligence, sources said. This will enable all previous bidders — IHH, Munjal-Burmans, Manipal-TPG, Fosun and Radiant-KKR — to participate in the process that will help maximise value, one of them added.
Earlier, in an extraordinary general meeting (EGM) held on Tuesday, Fortis Healthcare shareholders voted out Brian Tempest, one of the four directors who were proposed to be removed. Three others — Sabina Vaisoha, Harpal Singh and Lt Gen Tejinder S Shergill — have already resigned. The shareholders also approved the appointment of Suvalaxmi Chakraborty, Ravi Rajagopal and Indrajit Banerjee as directors along with existing member Rohit Bhasin.
As of press time on Wednesday night, the board meeting was still on. Shivinder Mohan Singh, the founding co-promoter of Fortis Healthcare, in a letter on May 14, had also requested the board to consider all binding and non-binding bids. This was subsequently supported by Yes Bank, which owns 15.14% in the hospital chain.
“Shivinder had suggested that it was incumbent upon the board to run an open and transparent process, demonstrating a committed level of readiness and willingness to share the company’s books with all serious bidders,” said the person.
To resolve the current cash flow concerns, the former promoters had suggested that each prospective investor should be asked to put down earnest money of about $10 million to demonstrate seriousness, which could be adjusted at the time of capital injection from the successful bidder, he added.
Tempest, who chaired the May 10 meeting, said liquidity and certainty were reasons for the board’s decision to choose the Munjal-Burmans offer, which would see the consortium pick up 16.80% stake through infusion of Rs 1,800 crore into the company. The board had voted 5-3 for this proposal, against the recommendations of financial advisers Arpwood Capital and Standard Chartered that favoured bids by Malaysia’s IHH and Manipal-TPG.
Of the five who supported this proposal, four are no longer part of the board as of Wednesday. Contenders such as Manipal-TPG and IHH have put in revised offers even after the board’s decision to choose the Munjal-Burmans offer.
Source: Economic Times