Reliance Industries, in partnership with Capri Global Holdings, is set to acquire Mumbai’s 1,500-bed Sevenhills Hospital following a corporate insolvency resolution plan, ending an eight-year impasse. Jupiter Lifeline Hospitals was the other bidder in the fray for the distressed company.
On Wednesday, the National Company Law Tribunal (NCLT) approved a resolution plan by Capri Global Holdings which involves equity support from the Mukesh Ambani-owned Reliance Group to implement the plan, showed the order, a copy of which was seen by ET.
As per the approved plan, secured creditors will receive Rs 449 crore or 40% of their claims, Municipal Corporation of Greater Mumbai (MCGM) will be paid a settlement amount of Rs 223.4 crore and about Rs 205 crore. Employees and other operational creditors will receive Rs 6 crore. Reliance Group and Capri Global Holdings have entered a scheme of arrangement involving multi-step takeover wherein the former will provide equity support and the hospital will be converted into a not-for-profit company.
Fund Infusion Likely Via SPV
Capri Global’s plan was approved unanimously by lenders primarily because among the two bidders, it was the one that received a no-objection certificate from MCGM, a mandatory requirement after a 2019 Supreme Court ruling that halted an earlier bid from Dr BR Shetty through Shetty’s New Medical Centre in 2019 after the civic body opposed it.
SevenHills Hospital, located in suburban Mumbai, shot into the limelight when superstar Amitabh Bachchan’s granddaughter Aaradhya Bachchan was born there. Verified financial creditors had claimed Rs 1,122 crore for Sevenhills Healthcare, which operates the hospital. Under the scheme of arrangement, Capri Global and Reliance Group will infuse funds through equity, quasi-equity or shareholder debt, potentially via a special purpose vehicle. On the effective date, they will subscribe to 10 million new shares for Rs 10 crore, securing full ownership, after which all existing shares will be cancelled for zero consideration. Both partners are expected to hold equal stakes.
Not-for-profit company
A subsequent scheme on making priority payments or corporate insolvency resolution plan cost will convert SevenHills Healthcare into a not-for-profit company, with Reliance Foundation Hospital Trust replacing all earlier guarantors. The conversion enables the entity to reinvest any surplus entirely into expanding healthcare infrastructure, the order said. Senior advocate Niranjan Reddy, Siddharth Ranade and Kaazvin Kapadia represented the resolution professional Abhilash Lal while senior advocate PH Arvindh Pandian, Jinal Shah and Palak Nenwani represented the committee of creditors.
MCGM, which owns the land for the Mumbai hospital, has claimed Rs 140.8 crore in unpaid rent. In July 2019, the NCLT cleared a Rs 1,000-crore plan by New Medical Centre (NMC), but MCGM challenged it. While the NCLAT rejected the challenge, the Supreme Court overturned both orders in November 2019. Lenders say delays stemmed from MCGM’s reversal—after initially agreeing to NMC’s Rs 102-crore settlement and a 20% bed reservation for poor patients, it later told the top court it was not bound to accept a plan since it had issued a pre-insolvency lease-termination notice.
Source: Economic Times