A complete change of the entire Fortis Healthcare Ltd.’s board at this time will lead to more turbulence and ambiguity for the company as well as its management, four directors of India’s second-largest hospital chain today said in a letter addressed to stakeholders.
The letter is in response to resolutions proposed by three Fortis shareholders— East Bridge Capital Master Fund, East Bridge Capital Master Fund I, National Westminster Bank Plc. (Trustee of the Jupiter India Fund)—to remove the four directors. The shareholders had on April 28 sought an extraordinary general meeting to remove Brian Tempest, Harpal Singh, Sabina Vaisoha and Tejinder Shergill. The four have now advised shareholders, set to vote between May 22 and 30, to reject the move.
The resolution comes at a time when Fortis Healthcare is evaluating multiple takeover offers since its founders Malvinder Singh and Shivinder Singh stepped down following allegations of siphoning funds. The healthcare company has received binding offers from TPG-backed Manipal Health Enterprises Ltd., Malaysia’s IHH Healthcare Bhd., KKR-backed Radiant Life Care Pvt., and a joint offer by Sunil Munjal’s Hero Enterprise Investment Office and the Burman Family Office.
The four directors, in the letter, said the current board, due to its association with the company over a period of time, is capable of leading it out of its current problems.
In spite of the headwinds from the industry, regulatory and otherwise, the fact of the matter is that FHL (Fortis Healthcare) is still discharging its obligations in as efficient a manner as possible towards its patients, employees and all shareholders. This is primarily only because of a judicious way of working between the management and the Board, one that empowers decision making, delegates responsibility and demands accountability.Letter By Four Fortis Directors
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The three Fortis shareholders had also proposed appointment of Suvalaxmi Chakraborty, Ravi Rajagopal and Indrajit Banerjee as independent directors. The existing directors invited them to join Fortis’ board as additional non-executive independent directors effective April 27. They, however, pointed out the four “represent similar areas of expertise and have been nominated by the same set of shareholders”.
In their letter, they also defended the board’s decision to only consider binding bids. Non-binding bids involve considerable uncertainty and merely running a due diligence process does not guarantee a binding bid, which the board had wanted in the best interest of the company, they said.
We would have also run the risk of our current binding offers expiring soon. Accordingly, by opening up the due diligence process, the Board would have taken a significant risk and put the Company once again into an uncertain situation. Further, a process where one of the bidders has the ‘right to match’ would not be fair and may have seen bidders not participating at all knowing that one of the bidders could match their offer in the end.Letter By Four Fortis Directors