SC Lim­its Singh Bros’ Abilty to Sell For­tis Stake

STAY OR­DER Singhs told to main­tain sta­tus quo on shares held by For­tis Health Hold­ing in the hospi­tal chain fol­low­ing Dai­ichi plea

The Economic Times - - Companies: Pursuit Of Profit - Prabha.Ragha­van @times­group.com

New Delhi: In a po­ten­tial set­back for the cash strapped pro­mot­ers of For­tis Health­care — Malvin­der and Shivin­der Singh, the Supreme Court has told the broth­ers to main­tain the cur­rent sta­tus of shares held by one of their com­pa­nies in For­tis Health­care.

The or­der, a re­sult of Dai­ichi Sankyo’s lat­est pe­ti­tion at the apex court, might block the broth­ers from sell­ing any shares in their flag­ship hospi­tal chain un­til ar­gu­ments are heard likely af­ter four weeks.

A lawyer for the Singhs said the or­der does not af­fect other sales of shares of the hospi­tal group, in­clud­ing those to pare debt, as it only ap­plies to one par­tic­u­lar com­pany — For­tis Health­care Hold­ing. This com­pany held 42.86% stake in For­tis Health­care as of the end of the June quar­ter, down from 52.20% at the end of the March quar­ter, ac­cord­ing to the Bom­bay Stock Ex­change (BSE). The Supreme Court on Fri­day is­sued no­tice to RHC Hold­ing and Os­car In­vest­ment, com­pa­nies con­trolled by the Singhs that to­gether own For­tis Hold­ing. RHC and Os­car are ex­pected to sub­mit a re­ply to Dai­ichi’s pe­ti­tion be­fore the next date of hear­ing, which has not been fi­nalised.

“Is­sue no­tice, re­turn­able in four weeks. In the in­terim, it is di­rected that sta­tus quo as on to­day with re­gard to the share­hold­ing of For­tis Health­care Hold­ing in For­tis Health­care shall be main­tained,” the bench stated.

Shares of For­tis Health­care dropped 2.44% in­tra day at the BSE af­ter the court’s or­der was passed. The stock closed at ₹ 151.70, 0.13% lower from the pre­vi­ous close, while the bench­mark Sen­sex ended 1.01% lower.

“As the mat­ter is sub-ju­dice, we can­not com­ment,” a spokesper­son for RHC Hold­ings told ET.

“For­tis Health­care Hold­ing can­not for four weeks change the sta­tus of the shares they hold in For­tis Health­care as of to­day,” Anu­radha Dutt, coun­sel for the Singhs, told ET. “This or­der only con­cerns For­tis Health­care Hold­ing and has noth­ing to do with any other shares (in­clud­ing those of for­eign in­vestors) in For­tis Health­care.”

On the other hand, Dai­ichi’s co- un­sel told ET that the Supreme Court’s lat­est or­der “clearly” pre­vents any stake sales or di­lu­tions by For­tis Hold­ing. The firm also ex­pects the move to im­pact the Singhs’ de­ci­sion to in­crease the share­hold­ing limit for for­eign in­vestors in the hospi­tal chain to 74% from 24% — a move that was ap­proved by the Re­serve Bank of In­dia in July. “The in­duc­tion of for­eign in­vestor in For­tis Health­care will lead to change in sta­tus quo of the share­hold­ing in For­tis Health­care and will be in vi­o­la­tion of supreme court's or­der,” the coun­sel told ET.

The Singhs are cur­rently locked in lit­i­ga­tion ini­ti­ated by Dai­ichi, which is try­ing to en­force an ar­bi­tra­tion award that would re­quire the broth­ers to pay the com­pany ₹ 3,500 crore in dam­ages and in­ter­est. A Sin­ga­pore tri­bunal had granted this award last year af­ter Dai­ichi al­leged the Singhs con­cealed in­for­ma­tion of wrong­do­ing at Ran­baxy while sell­ing it for $4.6 bil­lion in 2008.

Since June, For­tis Health­care Hold­ings has pared its share­hold­ing in the For­tis hospi­tal chain to around 37% from 52.20%, Dai­ichi's coun­sel had al­leged at the Delhi High Court on Thurs­day. The share sale has re­port­edly been to raise cash to pay off the high cost debt. Dai­ichi al­leged that th­ese sales vi­o­lated court or­ders to main­tain the value of the Singhs’ un­pledged as­sets and fears the move would make it dif­fi­cult to re­alise the award if it wins the case.

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