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Fortis Healthcare board has approved the proposed acquisition of the entire portfolio of Singapore-listed RHT Health Trust (RHT) for an enterprise value of around Rs 4,650 crore, the company said on Wednesday.
The step is part of a restructuring initiative aimed at consolidating the entire Indian asset portfolio comprising various clinical establishments and two operating hospitals of RHT Health Trust into Fortis.
Fortis and RHT have inked a pact proposing the acquisition of all the securities of RHT's entities in India holding, clinical entities and businesses via purchase of securities for an enterprise value of around Rs 4,650 crore, Fortis said in a statement.
This includes Rs 1,152 crore of debt of RHT as on date, it added.
"This restructuring is a significant initiative and will integrate RHT's entire India-based asset portfolio into Fortis while also improving the overall financial health of the business," Fortis Healthcare CEO Bhavdeep Singh said.
The proposed purchase of securities will be conducted on an arm's length basis, he added.
"The proposed transaction would be funded by Fortis with a combination of equity, quasi-equity and/or debt. Fortis has an enabling resolution in place to raise capital of up to Rs 5,000 crore," Singh said.
The proposed transaction will be subject to the satisfaction of conditions precedent, including regulatory and shareholder approvals by Fortis, approvals by RHT unitholders and other approvals as may be required, he added.
Fortis has an indirect interest of 29.76 per cent in RHT.
The term sheet signed by both Fortis and the trustee-manager of RHT is intended to set out the basis for further discussion in respect of the proposed transaction.
Both Fortis and RHT have entered into an exclusivity period for 60 days commencing from the date of the term sheet with a view to executing definitive agreements for the proposed transaction.
Fortis has also entered into hospital and medical services agreements with entities held by RHT under which it pays service fees to such entities for services rendered.
For 2017-18, the net cumulative service fees to be paid by Fortis to RHT is estimated to be around Rs 270 crore.
"Upon completion of the securities acquisition, the service fees that Fortis was paying will be completely eliminated, thereby improving significantly its operating profitability," Fortis said.