REJECT FORTIS MANIPAL DEAL this deal is purely done to save the promoter from prosecution
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As per new Scheme of arrangement Fortis Healthcare (FHL) will demerge its hospital business in separate 100% subsidiary of the Fortis Healthcare Limited. Thereafter this new company will be merged into Manipal Hospital Enterprises Pvt. Limited and existing Fortis Healtcare will be shell company which will eventually hold 36.5% shares of SRL limited.
Currently FHL is holding 56.5% stake of SRL. Out of 56.5% stake, FHL is selling 20% shares to Manipal for 700 Cr.
All future liabilities arising from SFIO / SEBI investigation or against any other matter like any corporate guarantee executed by the company for third party or under Diacchi arbitration award will remain with FHL only.
There are ongoing investigation against erstwhile promoters and the Company for transfer of fund in various companies owned by erstwhile promoters and siphoning of the funds from the company (the petitioner has sufficient evidence of siphoning of funds). This matter is under investigation from SFIO , SEBI and independent Law firm appointment by board of Directors. Since Company is expecting future liabilities also hence this demerger/Merger arrangement should be restrain till investigation is over. Because future liabilities will not be shared by the demerged company.
There are other suitor also who are interested to buy these assets at much higher price but they want to get investigation completed and have report in public domain before they go ahead with the bid. But Manipal and erstwhile Promoters of FHL (who are hand in glove with the current management team & Board of Directors) agreed to have deal at much discounted price than actual value of the assets to save erstwhile promoters from further prosecution. As a shareholder we want Company must publish the investigation reports first in public domain and bring back the siphoned off money by erstwhile promoters in the company , Make a Board strong by appointing some more prominent members and call for open bidding for buyer of the assets or business as a whole. As on date promoters have less than 1% holding as on date .
As per media reports and due diligence done by one of the Buyer IHH around 9 month back for buy 26% equity in the company @ 240 but now they are valued the company @ 135 -140 per share which is almost 42% discount . Although management claim that valuation is done by independent valuer jointly appointed by the FHL and Manipal. Valuer have taken all the data for only one year ended Dec 17. Under this period Fortis performance was poor due to some internal factors as well external factors hence based on 2 bad quarters you can not have the valuation of the business as a whole.
SRL valuation is done 3600 Cr. as against PWC report submitted to Company some time back valuing SRL at 5400 Cr -during NCLT demerger process
While Manipal-TPG combined have done due-diligence on Fortis Healthecare Ltd, FHL has not done any due diligence of Manipal before entering the deal. So this is a question mark on internal working and management of Fortis as there is a lack of information in public domain on Manipal Hospitals (being non-listed).
Recently we have seen several exit from the Board of Directors of FHL. Fortis currently has only 3 Board members, out of which one member is relative of Singh brothers hence this deal approved by Board of Directors in hurry to help Singh brothers.
Clearly the deal announced is not in the interest of minority shareholders. The stock markets have already given a huge thumbs-down on the deal valuation where the stock tanked on deal announcement by as much as 25% from its weekly highs. The valuations were kept low to benefit TPG-Manipal and transfer the assets in a hush-hush manner to save erstwhile promoters from possible prosecution because the hole in the balance sheet is much bigger than what was reported by auditors. It shall be proven the court of law at an opportune time by the petitioner.
Minority Shareholder of Fortis Healthcare Limited
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