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Mumbai: Fortis Healthcare Ltd shareholders have approved the company’s acquisition by Malaysia’s IHH Healthcare Bhd, the company said, ending prolonged uncertainty at the hospital chain that has faced corporate governance allegations, liquidity crunch, and various attempts to secure control.

The company’s chief executive Bhavdeep Singh said the development was a “significant milestone" for the hospital chain. According to results of postal ballot, polling and e-voting filed by India’s second-largest hospital chain, 99.7% shareholders voted in favour of issuance of 235.29 million shares on a preferential allotment basis through e-voting at an extraordinary general meeting (EGM) on 13 August.

Priced at 170 each, the shares will aggregate up to 4,000 crore and be issued to Northern TK Venture Pte Ltd, a wholly owned unit of IHH Healthcare. “This is a key milestone. We eagerly look forward to the future and are very excited to work with IHH. The benefit of working with them would be significant," Singh said on a media call.

Over 99% of shareholders also voted in favour of a resolution to increase the authorized capital of the company and an alteration of capital clause memorandum of association. In July, the Fortis Healthcare board had approved a 4,000-crore takeover bid from IHH Healthcare for a 31.1% stake, valuing the cash-strapped firm at 8,880 crore.

The transaction, pending approval by the Competition Commission of India, will be followed up with an open offer for an additional 26% stake. IHH Healthcare is expected to spend a total of 7,300 crore to acquire a 57.1% stake, provided the open offer is fully subscribed.

Nearly all shareholders also approved the reclassification of promoters Malvinder and Shivinder Singh, among others, from the “promoter and promoter group" shareholder category to the “public" shareholder category.

Subsequently, as part of the same resolution, Northern TK Venture was approved as a promoter, with 99.997% shareholders voting in favour. “We have been taking specific, concrete steps for the past two months to de-link ourselves from the promoter group", Bhavdeep Singh said, adding the company is taking “every step possible" to recover its dues from the Singh brothers.

Fortis also reported a quarterly loss of 70.9 crore during the June quarter on Tuesday from a net profit of 5.5 crore a year ago. Net revenue fell 9.4% to 1,042 crore from 1,157 crore a year ago.

The June quarter performance was “quite challenging", Singh said, as it was impacted “severely" by the liquidity crunch at Fortis for the past 18 months, which “imposed severe constraints on resources, growth initiatives and expansion".

However, July and August saw an uptick in occupancy levels to 69% from 62% during the June quarter.

“We feel confident and optimistic that this upward business momentum will accelerate further and result in a progressively improving quarterly performance," Singh said, adding that a slew of initiatives to improve occupancy, drive revenues and optimise costs have been implemented, with a target to increase occupancy levels beyond 70% by the end of the fiscal.

Fortis also plans to focus on cost management and optimization across functions and regions, and deploy capital judiciously, it said in a statement.

Shares of Fortis Healthcare on Tuesday rose 0.86% to 146.05 on BSE, while the benchmark Sensex 0.55% to 37,852 points.

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