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Fortis redeems FCCBs worth $100M held by Singapore’s sovereign fund GIC

22 May, 2015

Fortis Healthcare Ltd, the second-largest hospital chain in the country by revenues, has redeemed $100 million worth of outstanding Foreign Currency Convertible Bonds (FCCBs) listed on the Luxembourg Stock Exchange, it said on Friday.

Singapore’s sovereign wealth fund GIC had invested around $100 million (under Rs 450 crore that time) in Fortis’ FCCB issue in May 2010. The bonds were optionally convertible at Rs 167 per share with a yield-to-maturity of 5.537 per cent per annum.

The total payout for redeeming the outstanding bonds was $105.67 million (Rs 675 crore), including the redemption premium of around $3.17 million and interest payment of $2.5 million for the preceding six months period ended May 21, 2015.

The company has made the redemption from its existing cash proceeds, it said.

Post the redemption of the FCCBs, the company’s net debt to equity ratio is estimated to be less than 0.15x as against 0.27x as on December 31, 2014.

“The FCCB redemption further strengthens our balance sheet giving us greater flexibility to pursue our agreed strategy,” Gagandeep Singh Bedi, chief financial officer of Fortis Healthcare, said.

GIC was also to put in Rs 380 crore through a preferential allotment of shares in 2010 but had deferred the plans and eventually did not invest more in the firm.

The healthcare firm had issued FCCBs to fund its takeover battle for Singapore-based Parkway Holdings. It had eventually bowed out of the race for Parkway, selling its existing stake to Malaysian sovereign fund Khazanah, that went on to build the largest Asian healthcare company under IHH.

Fortis had thereafter taken a u-turn on its international expansion strategy and gradually sold assets in Southeast Asia and Australia. Recently, Fortis Healthcare completed sale of its Singapore-based healthcare services unit RadLink-Asia Pte Ltd and its subsidiaries to Fullerton Healthcare Group for S$111 million (approximately $83.5 million or Rs 530 crore).

Fortis Healthcare stock last traded at Rs 169.75 a share, down 0.12 per cent on the BSE in a strong Mumbai market on Friday.

Given that Fortis shares are not trading at any significant premium to the pre-set conversion price of the FCCBs held by GIC, the redemption of bonds was a foregone conclusion.

An email sent to Fortis spokesperson for more details on the development did not elicit a response.


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Fortis redeems FCCBs worth $100M held by Singapore’s sovereign fund GIC

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