Max Healthcare, US-based Princeton Healthcare, Jupiter Hospital, Capri Global and JM Financial Asset Reconstruction Company (ARC) are among eleven entities that have shown interest in acquiring Sevenhills Healthcare, said people aware of the development.
JP Morgan Chase-backed Sevenhills Heathcare which operates 1,500 beds in Mumbai and 303 beds in Visakhapatnam, is undergoing insolvency proceedings since 2018. The process of finding a buyer for the hospital chain was stalled due to a dispute between lenders and the Municipal Corporation of Greater Mumbai (MCGM). Later it was declared as a Covid-19 hospital under the Disaster Management Act.
The people cited earlier named KIMS Hospital, Virinchi Hospitals, Bommidala Enterprises, Alpha Alternatives, MK Rajagopalan, promoter of MGM Hospital, and a consortium of three individuals–Sandeep Gupta, Anup Mittal and Shalini Gupta—as the other entities that have submitted expressions of interest (EoI) for acquiring the hospital chain.
The resolution professional, Abhilash Lal, and JM Financial ARC did not respond to ET’s request for comment.
Max Healthcare has a network of 17 hospitals; KIMS operates 12 multi-speciality hospitals; and Virinchi Hospital operates 700 beds in Hyderabad. Capri Global and Alpha Alternatives are fund houses, while Bommidala operates tobacco processing units. JM Financial ARC is also a verified financial creditor.
MCGM, which owns the land on which the hospital is built, has submitted a claim of Rs 140.8 crore as unpaid rent, said one of the persons cited above. However, the resolution professional has not admitted it.
Sevenhills Healthcare has admitted claims of Rs 1,357 crore from verified financial creditors.
The National Company Law Tribunal has approved a Rs 1,000-crore resolution plan by Dr B R Shetty’s New Medical Centre, but the plan was challenged by MCGM at the National Company Law Appellate Tribunal. The appellate tribunal, too, rejected MCGM’s petition. However, in November 2019, the Supreme Court overturned the tribunal and appellate tribunal’s orders.
MCGM had initially agreed to the successful bidder’s Rs 102-crore offer and a promise to reserve 20% of the beds in the Mumbai hospital for the economically deprived. But later it reneged on the deal, arguing at the top court that it is not bound to accept a resolution plan even if the tribunal approves it on the grounds that it had issued a notice to terminate the lease agreement before the company was admitted for insolvency. Winning bidder Dr Shetty’s companies went bankrupt within a few months after the apex court’s order also delayed the resolution.
Last December, the BJP had proposed that MCGM should take control of the Mumbai hospital. In response, chief minister Eknath Shinde said the state government would decide about acquiring the hospital after a ruling by the NCLT on the ongoing litigation.
Legal experts say that if a private operator runs the hospital, it would be better positioned to infuse capital. “MCGM, on the other hand, will have limited ability to infuse capital, which in turn would impact services,” said an expert. Recoveries for lenders may suffer if MCGM does not cooperate in the sale of the hospital chains thus dissuading overseas investors. Two of alternate investment funds- Bank of America and Broad Peak Investment Advisors have invested in securities receipt of Sevenhills Healthcare issued by JM Financial ARC.
Eventually, it is up to the lenders to decide on the bidder, the same person said.
