MGM Healthcare Acquires Vizag's SevenHills Hospital Under IBC Process
- 18th Jul 2024
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MK Rajagopalan's INR 171-Crore Resolution Plan Approved by Lenders MK Rajagopalan, the promoter of Chennai-based MGM Healthcare, successfully acquired the 300-bed SevenHills Hospital in Visakhapatnam through the Insolvency and Bankruptcy Code (IBC) process.
The National Company Law Tribunal (NCLT) at Mangalagiri, Amravati bench, approved an INR 171 crore resolution plan against INR 1,361.89 crore admitted claims from creditors, employees, and others.
The secured creditors had an admitted claim of INR 1,273 crore.
Financial Infusion and Competing Bids:
The INR 171-crore resolution plan includes a fresh infusion of INR 18 crore towards capital expenditure and working capital requirements for the hospital. Alongside Rajagopalan, two other parties—the Consortium of Mohan Reddy and Capri Gold Holdings Pvt Ltd—submitted resolution plans. Rajagopalan’s plan was approved unanimously by the committee of creditors (CoC) during the 47th meeting.
Hospital Performance and Strategic Expansion:
SevenHills Hospital in Visakhapatnam reported a revenue of over INR 100 crore in FY24. With this acquisition, MGM Healthcare Group has surpassed a landmark of over 1,000-bed capacity within just five years. Dr. Prashanth Rajagopalan, director of MGM Healthcare, mentioned that this acquisition marks MGM Healthcare’s first expansion outside Chennai and aligns with their commitment to thoughtful geographical expansion.
Historical Context and Legal Proceedings:
Founded in 1988, SevenHills is one of the oldest multi-specialty hospitals in Visakhapatnam, strategically located at Rockdale Layout on Waltair Main Road. Ernst & Young served as the advisory partner for this acquisition.SevenHills Healthcare was first admitted to the corporate insolvency resolution process (CIRP) in March 2018 by NCLT’s Amaravati bench at Hyderabad after Axis Bank filed an application under Section 7 of IBC, 2016.
In September 2018, the committee of creditors (CoC) approved a resolution plan by Dr. Shetty’s New Medical Centre, which proposed to infuse INR 1,002 crore of fresh equity into SevenHills.
This plan was approved by the NCLT in July 2019 but faced prolonged legal battles with the Municipal Corporation of Greater Mumbai (MCGM) and delays due to the pandemic, leading to the deal being scrapped.
In January 2023, fresh Expressions of Interest (EoIs) were invited separately for the Visakhapatnam and 1,500-bedded Mumbai hospitals.
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