Singapore-based Parkway Holdings, the takeover target of India’s Fortis Healthcare and Malaysian government’s investment firm Khazanah Nasional Berhad, said today Parkway’s shareholder agreement with Khazanah for their joint venture (JV) operations in Malaysia had in-built terms for conflict settlement between the two partners.
The company’s clarification, posted on the Singapore Stock Exchange (SGX) website, was in response to a news report in the Singapore financial daily Business Times, which suggested the Parkway-Khazanah JV in Malaysia could be in trouble if Khazanah loses the bid to acquire a controlling stake in Parkway.
The JV – Pantai Irama Ventures Sdn Bhd (PIVSB) – is 60 per cent owned by Khazanah through Pantai Holdings, while the rest of the shareholding is with Parkway. PIVSB had approached Pantai Holdings on June 16 to renew Parkway’s contracts to serve Malaysian hospitals. While the Parkway management hopes to get it renewed through the support of Khazanah, the newspaper report suggested help may not come in if it loses out to Fortis.
The revenues from Pantai JV accounted for about 22 per cent of Parkway’s consolidated earnings before interest, taxes, depreciation and amortisation (Ebitda) for the year ended December 2009.
Parkway clarified that the shareholder’s agreement provides for a mechanism to resolve any deadlock. “This would involve parties being obligated to first negotiate in good faith to resolve the deadlock, failing which, to negotiate in good faith to effect a sale to each other and, failing which, to take all necessary steps to jointly dispose their interests to a third party,” the company said.
The company’s clarification came after Fortis on July 1 made a counter-bid on Khazanah’s partial offer to pick up a stake of 51.5 per cent in Parkway. Unlike Khazanah, Fortis has given a general bid to acquire all the shares of Parkway that it does not own for $2.3 billion (about Rs 11,000 crore) at S$ 3.8 (Rs 126.6) a share.
Parkway shares, which resumed trading in SGX today, rose 7.28 per cent to close at S$3.83 a share.