SINGAPORE - The fight for control over one of Singapore's largest private clinic operators is heating up.

Hong Kong-listed Lippo and Lippo China Resources, controlled by Indonesia's Riady family, on Tuesday launched a cash offer to raise their stake in Healthway Medical Corp (HMC) at 4.2 cents a share.

The offer comes shortly after Lippo first showed its hand at the end of December last year when it scooped up a 6.05 per cent stake in HMC in market transactions.

Lippo's offer vehicle, Gentle Care, said in an offer announcement to the Singapore Exchange on Tuesday that it intends to keep HMC listed, and is making the offer to raise its shareholding.

"The offeror believes that it can provide the company with a stronger shareholder base to support the company's future business growth plans over the long term," said Gentle Care.

"Lippo and Lippo China Resources see the business potentials in the healthcare industry in Singapore, and would therefore like to establish their presence in this field."

It added that HMC, as a well-established private healthcare provider in Singapore, matches Lippo's strategy to acquire "quality healthcare management capability".

Lippo is moving swiftly to fortify its stake after HMC entered into a convertible notes deal with a new investor, Cayman-based Gateway Fund I last month that could give Gateway significant control over how HMC is managed.

HMC intends to raise $70 million from Gateway by issuing convertible bonds that can be swapped for up to 90.17 per cent of HMC's existing share capital, or 47.4 per cent of its enlarged share capital.

The notes will also give Gateway the right to nominate two non-executive directors to the HMC board and pick out a chief financial officer.

HMC would also need Gateway's consent before entering into "any material transactions, undertakings or corporate actions", including the appointment or removal of its chief executive officer.

HMC shareholders have not yet voted to approve the size of the notes conversions, but Lippo's cash offer will also extend to any new shares issued in relation to the proposed convertible notes issue.

The Lippo offer is also subject to it having received, by the close of the offer, valid acceptances for it to control more than 50 per cent of the voting rights in HMC. Lippo-linked entities had a 13.29 per cent stake in HMC as at last Thursday.

At 4.2 cents a share, Lippo's offer represents a premium of 13.8 per cent, 19.7 per cent, 19.3 per cent and 22.1 per cent over the volume weighted average price per share for the one-month, three-month, six-month and 12-month periods immediately prior to the offer announcement.

HMC shares rose 0.1 cent or 2.5 per cent to close at 4.1 cents on Tuesday before the announcement was made.

Mr Havard Chi, portfolio manager of Quarz Capital Management which has a stake in HMC, said: "We think Lippo's offer undervalues the company, but is definitely superior to the convertible bond deal which HMC is pushing to shareholders.

"We as shareholders will either tender our shares or vote actively against the convertible bond deal in any extraordinary general meetings."

Mr Chi added: "This solidifies our thesis of the strong interest of the Lippo group in building up their successful healthcare franchise in Asia."

Last month, OUE, which is also controlled by the Riady family, picked up a 12.5 per cent stake in International Healthway Corp, the medical property developer that was spun out of HMC, in a off-market transaction.