Private equity fund Gateway Partners emerged victorious at Healthway Medical Corp's extraordinary general meeting yesterday despite a flurry of questions from sceptical minority shareholders.
Backing from 95.2 per cent of voting investors means Healthway - Singapore's largest clinic chain - is set to issue $60 million worth of convertible bonds to Gateway in exchange for cash and its financial survival. The result was a damp squib to many who had expected major shareholder Lippo Group to vote against Gateway instead of alongside it, as it is believed to have done.
The Indonesian conglomerate is still struggling with a general offer to take control of Healthway. Launched on Feb 7, the offer remains far from the 50 per cent ownership threshold it needs in order to turn unconditional.
If Gateway converts the $60 million bonds into shares worth 39 per cent of the enlarged Healthway, the resultant dilution could leave Lippo even further away from its goal.
Ultimately, Lippo seems to have voted on the basis that Healthway's cashflow problems are so dire and the operator's relationships with doctors, nurses, staff and suppliers so impaired that there really is no time for more tussling.
Besides, Gateway's funding deal - revised once after Lippo showed its hand - touts a much lower interest rate than initially tabled.
Minority shareholders were apprehensive. During the meeting at Kent Ridge Guild House, they repeatedly pressed Gateway's representative on the Healthway board, Mr Anand Kumar, on his fund's motives.
One shareholder questioned Mr Kumar's claim that Gateway was committed to staying with Healthway as a long-term investor.
Mr Kumar said: "I'm not a trader, I'm not here to do eight months of work and do a quick flip... We didn't come into this to make one or two million and walk away."
But because Gateway did not get a whitewash waiver from the authorities and does not intend to make a general offer if it crosses the 30 per cent ownership mark, it will need to sell some bonds to comply, Mr Kumar said.
Lippo is certainly hoping that it will be on the other end of this sale. As would those who had tendered their shares to Lippo. If Lippo's offer fails to turn unconditional, it has to return its acceptances, so those who tendered to it will remain as shareholders in Healthway.
Lippo has built a 23.7 per cent stake in Healthway through open market purchases. Until its offer closes on May 2, the level of acceptances it received will not be known.
A second resolution to approve the acquisition of Healthway Medical Enterprises (HME) passed with 98 per cent of votes in favour.
Mr Eric Wong Ong Ming was among three Healthway directors conspicuously absent at yesterday's meeting. He was sole director of HME over the years that Healthway lent prodigiously to it. He then quit and joined Healthway as chairman in 2015. Since then, Healthway has written off $18 million owed by HME.
Ms Angeleca Lim, who in January was ousted from her position as executive director of International Healthway Corp, was among the shareholders present yesterday.