Tue, 29 Sep 2020

By Lee Kah WhyeSingapore, Dec 12 (ANI): Unitholders of RHT Health Trust, a business trust listed on the Singapore Exchange (SGX), were expecting the EGM scheduled for 10am on December 3rdat The Temasek Club in Singapore to be a routine one.

There was only one main item on the agenda and that was to vote on the winding up of the company and proposed distribution of the remaining assets. However, a decision by the Supreme Court of India on November 15th upended plans and the EGM was called off at the last minute.

A statement by RHT's trustee-manager said that it will be in the interest of unitholders to adjourn the EGM. This is because of RHT's legal counsel in India had advised that if the winding-up proceeded, the Court may view it as an act in defiance of its ruling and subject RHT to possible contempt proceedings. Following legal advice, instead of the EGM, unitholders were asked to vote at the December 3 meeting to agree with the trustee-manager's proposal to adjourn the EGM to a later date and time when the trustee-manager will be able to make an informed decision as to whether and how the proposed voluntary winding up of RHT may proceed.

As it turns out, 61.28 percent of unitholders represented agreed with the trustee-manager and voted in favor of the adjournment. Consequently, the EGM will be adjourned to another date to be set.

What precipitated this was a contempt of court judgment by the Indian Supreme Court against Fortis Healthcare founders Malvinder and Shivinder Singh. The Supreme Court is also of the view that the disposal of RHT's portfolio and other transactions were in willful disobedience to the court's order on December 14, 2018. The court hearing for the contempt proceedings will start on February 3, 2020.

In January this year, Fortis had purchased RHT's entire portfolio of healthcare assets for USD660 million and each unitholder was paid SGD0.752. RHT Healthcare Trust was listed as Religare Health Trust at an IPO price of SGD 0.90 in October 2012. The portfolio of RHT consisted of two hospitals, 12 clinics, and four greenfield clinical establishments.

When its intention to buy up the assets of RHT was announced in November 2017, Fortis justified it by saying that integrating RHT's entire India-based asset portfolio was beneficial and would be value accretive for the company and its shareholders as it would save significant clinical establishment fees that Fortis was paying. They also claim that it will improve the overall financial health of the business.

Indeed, IHH's efforts to turn around Fortis' fortunes through cost-cutting is just starting to show results.

The contempt proceedings were initiated against Fortis for violation of its December 2018 order to maintain the status quo on the deal with IHH. Japanese drugmaker Daiichi Sankyo Co had argued that certain transactions between IHH and Fortis violated the court's directions. Daiichi Sankyo has been in a prolonged 12-year old tussle with the Singh brothers over Fortis shares it said it was promised amidst allegations by Daiichi Sankyo that the brothers withheld crucial information during the sale of drugmaker Ranbaxy in 2007. The Japanese company has been trying to stop the sale of Fortis on the grounds that it would hinder its ability to enforce an arbitration award against the brothersFortis's main shareholder is now IHH Healthcare which is controlled by Malaysia's sovereign wealth fund Khazanah Nasional Berhad. IHH holds more than 31 percent of Fortis and has attempted to take its ownership to over 55 percent. This was halted by the Indian Supreme Court because of the unresolved case with Daiichi.

Fortis, in its defense, can claim that it has not violated any court orders as the decision to take over RHT's assets was made before the December 14 order and that the Singh brothers are no longer shareholders of the company and therefore will not benefit from any of its transactions.

This saga calls into question whether RHT Healthcare Trust will be able to delist voluntarily or be forced to delist from the SGX. After the disposal of its assets, RHT no longer has an operating business and functions purely as a cash trust. As such, under SGX listing rules, it is given 12 months to establish a new business that is approved by unitholders or will be forced to delist. An extension of 6 months is possible if a definitive agreement for the acquisition of a new business has been signed and provided the acquisition can be completed within the extension period. January 14 marks the one-year anniversary of when RHT disposed of its assets.

Shares of RHT Healthcare Trust on SGX which was last traded at 1.9 Singapore cents has been suspended since November 22. (ANI)

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