SC order won't impact stake sale as Singh brothers not part of firm: Fortis

Fortis further clarified the order does not impact the preferential allotment made to Northern TK Ventures by Fortis on Nov 13, in accordance with the applicable law

A day after the Supreme Court ordered status quo be maintained with respect to the stake sale of Fortis Healthcare to Malaysia’s IHH Healthcare Berhad, the beleaguered chain said the order does not impact the preferential allotment of shares to Northern TK Ventures, a wholly-owned subsidiary of IHH.

In a statement on Saturday, Fortis said it was not a party to the judicial proceedings, in which the order has been passed.

“As we have reiterated many times earlier, the ex-promoters (Malvinder Singh and Shivinder Singh) are no longer a part of Fortis. Friday’s judicial proceedings were in matters solely related to them — specifically, in connection with alleged transfer of their shares to Indiabulls Housing Finance, in respect of which, contempt proceedings had been sought to be initiated. Also, the transfer itself has been sought to be set aside,” the statement said. 

Fortis further clarified the order does not impact the preferential allotment made to Northern TK Ventures by Fortis on November 13, in accordance with the applicable law. Moreover, requisite disclosures were made to all relevant regulatory authorities — consequent to which IHH Healthcare Berhad owns 31.1 per cent equity stake in Fortis.

The open offer by IHH for another 26 per cent stake (that was planned between December 18 and January 31) would not take place as the court has ordered status quo on the deal. It said it is evaluating the order, and seeking appropriate legal advice. 

Hearing a contempt petition moved by Daiichi Sankyo, the SC issued notices to Indiabulls Housing Finance, Indiabulls Ventures, Oscar Investments, and RHC Holding. Following the news, shares of Fortis fell as much as 14 per cent on Friday, but partially recovered to close at Rs 141.5 apiece, down 6.7 per cent.

Sources in Fortis had, however, indicated the hospital major, now backed by IHH, might move a review petition in the SC soon. The court reopens on January 2 after the winter break. The Fortis-IHH deal, as a result, will be on hold till the matter comes up before the court.

Sources also added IHH had not filed a caveat in the SC in the ongoing tussle. At the time the deal was announced, IHH's Group Chief Executive Officer Tan See Leng had told Business Standard they had taken a “calculated risk”.