Fortis Healthcare India's second largest hospital chain operator, on Tuesday acquired entire portfolio of Singapore-listed RHT Health Trust (RHT) for an enterprise value of around Rs 4,650 crore.
Potentially, it is expected to enhance stakeholders’ value. The proposed transaction would be funded by Fortis with a combination of equity, quasi-equity and debt. The deal 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.
The hospital chain operator has an enabling resolution in place to raise capital for up to Rs 5,000 crore and has an active dialogue with financial and strategic investors to raise funds, supported by Standard Chartered Bank acting as its financial advisor, Fortis Healthcare said in a statement on Tuesday.
The proposed transaction included acquisition of all securities of RHT's entities in India holding clinical establishment and business via purchase of securities.
The enterprise value includes Rs 1,152 crore of debt, which will be repaid. Fortis has a controlling stake with an indirect interest of 29.76 per cent in RHT. The proceeds raised from listing RHT in October 2012 on the SGX-ST were used by Fortis to de-leverage its balance sheet.
A substantial part of the net proceeds from the consideration received by RHT is expected to be distributed to its unit-holders including Fortis, thereby reducing the hospital chain operator's net investment. However, upon securities acquisition’s completion, the service fee that Fortis was paying will be completely eliminated, thereby improving significantly its Ebitda and cash flows.
With Fortis' completion of the proposed transaction, the cumulative incremental positive impact on Ebitda is expected to be Rs 270 crore.
In addition to acquisition of 49 per cent of Fortis Hospital Ltd, which is a part of this proposed transaction, there will be an interest saving of approximately of Rs 75 crore on an annualised basis. Billionaire brothers Malvinder and Shivinder Singh, owners of Fortis Healthcare, have been in news for the last few days after a report said that they took out at least Rs 500 crore ($78 million) out of the publicly traded hospital company they controlled without board approval about a year ago.
Meanwhile, the hospital chain operator, on Monday, sought a 15-day extension to declare earnings for the second and third quarter of the current financial year citing statutory auditors' inability to complete the audit before the stipulated board meeting.