Fortis Healthcare's rights issue in October

“We will soon file a letter of offer (LOF) next week. The decision was taken at a board meeting held recently,” Fortis Healthcare CEO & Managing Director Shivinder Mohan Singh told reporters here at the sidelines of a FICCI event. It was decided that Fortis Healthcare would soon approach Sebi after finalising all details, he added.

Companies file LOF at the time of rights issue, which is the equivalent of the Draft Red Herring Prospectus filed at the time of initial public offer. “We expect the rights issue by October,” a source said. Fortis Healthcare’s Rs 1,000-crore rights issue has been on the anvil since last year but unfavourable market conditions have prevented the company from hitting the market.

Use of funds
At the time of getting approval from its board last December, the healthcare chain had said proceeds of the rights issue would be used primarily for funding greenfield projects including the upcoming Medi-City in Gurgaon, redemption of preference shares, and repayment of short term debt, besides upgrading existing facilities. Company sources said the final LOF will include disclosures of the recent Rs 909-crore acquisition of ten Wockhardt Hospitals.

While Fortis Healthcare is yet to start making any payment for the purchase agreement it signed in August, it expects Wockhardt to complete necessary compliance with regulators and obtain no objection certificates for the sale within the stipulated 120 days’ time. With the acquisition, Fortis will have a capacity of 5,180 beds. Fortis already operates 28 hospitals across the country and had bought Escorts in 2005 for over Rs 585 crore. The 10 hospitals are spread across three metros — two in Mumbai, five in Bangalore and three in Kolkata.