Fortis CEO quits ahead of board meet next week
With Malaysia’s IHH Healthcare Bhd set to take control of Fortis Healthcare Ltd, Bhavdeep Singh, chief executive of the troubled hospital operator, resigned on Thursday, citing personal reasons.
The Fortis board is expected to meet next week to appoint representatives from IHH on the board, two people aware of the matter said. Singh’s resignation clears the way for IHH to bring in its own candidate to run Fortis Healthcare once the Malaysian group formally takes control.
Following approval from the Indian antitrust regulator on October 30, IHH will now buy a controlling stake in India’s second-largest hospital chain by infusing around ₹4,000 crore. It will subsequently offer to buy an additional 26% from public shareholders through an open offer.
“The preferential allotment of shares will be confirmed in the upcoming meeting,” one of the two people cited above said, requesting anonymity.
The meeting will also see the board making decisions on liquidity requirements of the company, including issues such as dispensing salaries and payments to vendors, maintenance of equipment and infrastructure upgrades. IHH will have the right to nominate directors constituting two-thirds of the board after the infusion of funds into Fortis.
“They will have to broaden the board, taking more members of the new promoters,” said Shriram Subramanian, founder and managing director of proxy firm InGovern Research.
In July, the Fortis board unanimously accepted the binding offer from IHH Healthcare, bringing the curtains down on a bidding war for the beleaguered hospital operator. The board of Fortis Healthcare approved a binding investment proposal from IHH to invest ₹4,000 crore by way of preferential allotment for a 31.1% stake, valuing the cashstrapped firm at ₹8,880 crore.
The money infused through the deal is expected to meet Fortis’s immediate and long-term liquidity requirements, including acquiring assets from Singapore-based Religare Health Trust (RHT) and providing an exit to private equity investors in SRL Diagnostics, Fortis’s diagnostic arm. “Majority of the amount is going to RHT in relation to proposed disposal of the entire portfolio of RHT,” said the second person on condition of anonymity.
NEW DELHI: