Fortis new binding offers due on Tuesday, board of directors defines the terms of assessment

Bidders from the Fortis Hospital Chain will have to pay a minimum investment of Rs 1,500 crore as a preferential allowance as the Fortis Healthcare Board has provided certain conditions so that only bids "serious" farms are made on the Tuesday deadline.

Other conditions include a detailed financing plan for the acquisition of RHT Health Trust, the Singapore-based trust that holds the Fortis real estate badets, with a maturity date of September 30, 2018, and a plan for the SRL arms diagnostics, including an exit strategy for private investors who own a third of the unit.

Bidders will be required to disclose the source of their funds to fund the transaction, including the firm letters of commitment from the lenders and the retention plans of the management and the current employees, said the persons involved in the transaction. .

Experts said potential bidders could revise their final bids further after allegations of financial embezzlement, brand ownership and related-party transactions have recently arisen following an investigation by the firm. lawyers Luthra & Luthra. The Delhi government has announced a ceiling on hospital margins from this year, which could negatively affect the Fortis top line by Rs 50-60 crore a year.

Fortis Healthcare's quarterly audited results are expected in the coming days.

According to some sources, Yes Bank, the most important shareholder of Fortis, has proactively engaged with the new board to ensure a transparent evaluation.

However, others said that there will be a lively contest.

"Company figures are stable compared to last year and now there is clarity on controversial deals, so it may be logical to badume that bids are going strong. improve, "said another manager.

"If the bids are revised, they will be higher," said Manoj Patkar, executive director and badociate of the 7i Advisors investment bank. "There have been compliance issues because of the group of promoters of yesteryear, but that has no effect on the basic fundamentals of this badet."

The Fortis Board of Directors was reconstituted after a group of minority shareholders opposed the way in which the bidding process took place. was conducted. On May 29, the new Fortis Board of Directors launched a new tendering process after the Munjal-Burman consortium, whose candidacy had been retained on May 10, gave its agreement.

There were already four bidders in the fray – IHH Healthcare, TPG-Manipal, KKR-Radiant and Munjal-Burman from Malaysia – and they had submitted various competing offers and financial structures.

The Munjal-Burman cartel had offered to invest Rs 1.050 crore in advance through a preferential allocation of shares (Rs 167 per share) and warrants (Rs 176 per share). They also proposed to inject an additional 750 rupees of warrants after receiving shareholder approval.

TPG-Manipal had proposed to inject Rs 2,100 crores through a preferential allocation at Rs 180 per share, which would enable it to take back 18.4% of the capital of Fortis at the valuation of Rs 9,403 crore. He planned to buy back the PE investors from SRL for 1,113.4 million rupees. In the third step, the consortium led by Ranjan Pai suggested merging Manipal Health Enterprises with Fortis Healthcare through a reverse merger after the restructuring of the SRL's board of directors.

IHH had planned to put in Rs 7,400 crore for a stake of more than 50% in Fortis at Rs 175 per share, while KKR-Radiant proposed to buy only the Mulund hospital at a value Rs 1,200 crore company, which,, would provide immediate liquidity of Rs 680 crore to Fortis Healthcare.

As part of its non-binding offer, it proposed to withdraw SRL so that Fortis could conduct an independent competitive sales process. She also proposed a split of hospital business into a new company excluding Fortis Healthcare's stake in SRL and announced the launch of an open offer to shareholders of this new company at Rs.126 per share, provided that Radiant-KKR has acquired 26% or more stake through an open offer or a preferential allotment.

"The board will focus primarily on valuations, certainty of operation, structural simplicity, timing and financing capabilities," said a familiar figure of developments, under cover of anonymity . "The reverse merger of Manipal will take longer than a clean transaction suggested by IHH.Also, the Munjals must increase their initial capital commitments.The company has immediate liquidity problems."

Standard Chartered Bank, Arpwood Capital, Cyril Amarchand Mangaldas and Vaish Associates advise Fortis.

Fortis President Ravi Rajagopal declined to comment on the case.