Fortis to explore legal recourse after SC issues contempt notice in Singh bros case
Fortis Healthcare said on November 18 it will explore legal options in response to the Supreme Court suo moto contempt notice against the company.
“The company is currently evaluating the judgement and exploring legal means to address it in an expeditious manner, keeping in mind the best interest of all our stakeholders,” Fortis said in a statement to stock exchanges.
“Separately, we have been advised that the open offer made by IHH Healthcare (IHH) to the public shareholders of Fortis for the acquisition of up to 26 percent stake, at Rs 170 per share, continues to remain in abeyance and would be adjudicated upon in conjunction with the hearing of the contempt petition,” the statement added.
The Supreme Court had earlier withheld an open offer by IHH after Japanese drug maker Daiichi had filed an affidavit on January 15 to stall transfer of funds from Fortis to Religare Health Trust (RHT).
The apex court has also sought an enquiry into consummation of the acquisition of healthcare assets from RHT by the company.
Fortis bought back hospital properties worth Rs 4,666 crore by acquiring securities in the RHT’s Indian entities that had ownership of these properties.
“Consummation of the transaction was value accretive for the company and its shareholders as it saved significant clinical establishment fees that Fortis was paying to RHT for utilisation of such assets, and accordingly resulted in an annual saving of around Rs 270 crore,” Fortis said.
The company’s response comes after last week’s Supreme Court ruling in which it held Fortis’ former promoters Malvinder Singh and Shivinder Singh, referred to as Singh brothers, guilty of contempt. The apex court asked the brothers to deposit Rs 1,175 crore each to avoid contempt. The court will next hear the case on February 3, 2020.
The apex court order came in response to Daiichi petition to implement the Rs 3,500 crore arbitration award against Singh brothers, who they allege to have concealed information related to the extent of regulatory problems at Ranbaxy.
Fortis said it remains firm that these transactions were at all times conducted in a fair and transparent manner after obtaining all relevant regulatory, shareholder and corporate approvals and only after making all due disclosures to public shareholders of the company and to regulatory authorities in a timely manner.
It stated that the IHH’s transactions was undertaken under supervision of an “entirely new board of independent directors, having no connection at all to the erstwhile promoters, that were appointed in April 2018 following feedback from minority shareholders and with the directors associated with the erstwhile promoters (Singh brothers) being either removed or having resigned.”
IHH, via Northern TK Venture Pte, had in last November completed the purchase of 31.1 percent stake in Fortis for Rs 4,000 crore in November last year.
The Fortis stock has declined 0.56 percent and was trading at Rs 142.80 on BSE at 12.45 pm on November 18.Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.