Minority shareholders had called for an extraordinary general meeting, scheduled to be held today
Ahead of Fortis Healthcare's extraordinary general meeting (EGM) today, three of the independent directors have resigned from the Board.
This move may trigger a review of the Board's decision to select the takeover offer made by Hero Enterprise Investment Office-Burman Family Office, said experts. Malaysia's IHH Healthcare Berhad and Manipal Health Enterprises-TPG Capital (MHE-TPG) combine were the other players who had made binding offers.
Experts have also said that the directors chose a graceful exit over being removed by the shareholders.
About a month ago, minority shareholders National Westminster Bank Plc as a trustee of Jupiter India Fund, East Bridge Capital Master Fund and East Bridge Capital Master Fund I, which together hold 12.04% stake in the hospital chain, had demanded an EGM.
They had sought the removal of Brian Tempest, Harpal Singh, Sabina Vaisoha and Tejinder Singh Shergill as directors of the company. In the last 48 hours, three of them have resigned citing "personal reasons", leaving behind Brian Tempest.
In the resignation letter, Harpal Singh has stated, "Despite delivering a good outcome for the company and its shareholders, there still persist some less informed attempts to steer the Board and the company into a situation that could be perilous for the company's future".
Earlier this month, the four directors had sent a joint representation to the shareholders of the company refuting allegations of not exercising their fiduciary duties and stated that they fairly represent interests of all shareholders. They had said that them quitting Fortis Healthcare will lead to "turbulence and ambiguity" at the company.
Defending their decision to select Munjal-Burman, Singh in his resignation letter mentioned that they were "selected on criteria of certainty, simplicity of structure, no walk away rights, an early infusion of funds, capacity to address strategic needs and the ability to traverse a challenging landscape."
Vaisoha, in her resignation letter sent over an email, appended Singh's explanation wherein he stated, "As the shareholders have expressed the desire to bring in a new Board, I welcome their decision and I would be happy to step down from the Board."
The minority shareholders had demanded appointment of Suvalaxmi Chakraborty, Ravi Rajagopal and Indrajit Banerjee as independent directors, who were eventually invited by Fortis Healthcare.
Arun Kejriwal, founder of Kejriwal Research & Investment Services, told DNA Money, "The writing is on the wall. It is better to quit as compared to being voted out by the stakeholders."
Brian Tempest did not respond to DNA Money's query asking if he too would resign prior to the EGM or go by the decision taken in the meeting.
According to Kejriwal, reviewing the decision of the earlier directors doesn't happen often. But it would be an unparalleled act if their decision on going with Hero Enterprise Investment Office-Burman Family Office gets reviewed. "After all, it's about sale of business and not any routine decision. The possibility of yet another round of bids looms again," he said.
Another expert said, "Already MHE-TPG consortium has submitted a modified offer after Munjals-Burmans were chosen over others. Similarly, IHH Healthcare, too, extended the validity of their bid. This only shows the fourth round of bids is underway, though the Board has not officially called them."
As per a media report, last week, YES Bank that is the single-largest shareholder in Fortis Healthcare, has asked the Board to review the decision of going with Hero Enterprise Investment Office-Burman Family Office. YES Bank had invoked its debt and now holds 15.14% stake in the hospital chain.
Hence, selecting Munjals-Burmans for the super speciality hospital chain is most likely to be reviewed and another round of offers can be expected from other players too.
The first round of offers went on for around 18 months which saw interests from MHE-TPG, IHH Healthcare and Abu Dhabi-based VPS Healthcare.
While the second round of bids that went on in the last couple of months witnessed heated contest among Munjals-Burmans, IHH Healthcare, MHE-TPG, KKR-backed Radiant Life Care and Fosun Health Holdings, which is an arm of Hong Kong's Fosun International.
The third round involved the formation of expert advisory committee wherein MHE-TPG, Munjals-Burmans and IHH Healthcare were in the fray.
BITTER PILL
- Minority shareholders had called for an extraordinary general meeting, scheduled to be held today
- They had sought the removal of Brian Tempest, Harpal Singh, Sabina Vaisoha and Tejinder Singh Shergill as directors of the company
- Experts have said that the directors chose a graceful exit over being removed by the shareholders
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They had sought the removal of Brian Tempest, Harpal Singh, Sabina Vaisoha and Tejinder Singh Shergill as directors of the company. In the last 48 hours, three of them have resigned citing "personal reasons", leaving behind Brian Tempest.
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