SINGAPORE - Despite being struck by a flurry of questions from skeptical minority shareholders of Healthway Medical Corp, private equity fund Gateway Partners has emerged victorious from Friday's extraordinary general meeting.
Now that it has the approval from 95.2 per cent of voting shareholders (1.3 billion votes out of 1.36 billion cast), Healthway - Singapore's largest clinic chain - is set to issue $60 million 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 Lippo 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 off from the 50 per cent ownership threshold it needs to cross in order to turn unconditional.
If Gateway now converts the $60 million bonds into shares worth 39 per cent of the enlarged Healthway, the resultant dilution could put Lippo even further off from its goal.
So, 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 on the other hand were apprehensive.
During the 1.5 hour meeting at Kent Ridge Guild House yesterday, 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 $1 or $2 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 will remain as shareholders in Healthway.
So far, Lippo has built up a 23.7 per cent stake in Healthway through open market purchases, but until its offer closes on May 2, the amount of acceptances it got will not be disclosed.
Healthway shares last traded at 4.3 cents before a trading halt was called during lunch, pending the release of the voting results.
A second resolution to approve the acquisition of Healthway Medical Enterprises (HME) also passed with 98 per cent of votes cast in favour.
Three Healthway directors were conspicuously absent at Friday's meeting, including Mr Eric Wong Ong Ming.
He was the sole director of HME over the years that Healthway lent prodigiously to it, 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 who voted on Friday.