Administrators have been appointed to the UAE operations of NMC Healthcare, five months after its parent company NMC Health was placed into administration in the UK.
The move will allow the company to raise funds and pay the salaries of its employees.
Richard Fleming and Ben Cairns of Alvarez & Marsal were appointed as joint administrators to a group of 36 trading entities in the country following a hearing in the Abu Dhabi Global Markets Courts. The appointment allows for a financial restructuring that will see $325m in additional funding provided to the businesses. The appointment does not apply to any of NMC Healthcare’s operating businesses outside the UAE.
“This is a positive next step in NMC’s restructuring process, allowing us to address the financial challenges we’ve faced since the fraud was uncovered earlier this year. NMC is a strong business operationally and we will continue to function as usual and care for our patients through the administration period," the company's acting chief executive Michael Davis said.
"The financial restructuring will offer additional security to the company and allow us to continue to contribute effectively to the healthcare system in the UAE."
During the hearing, counsel for the companies argued that the appointment of administrators was necessary to secure additional funding so that the company could meet its payroll obligations later this month. Some $250m of the additional funding is being provided by the group's largest creditor, Abu Dhabi Commercial Bank, with the remainder coming from HSBC, Emirates Islamic Bank and New York-based Sculptor Capital Management. A creditors' committee of 10 banks, which hold $2.8bn of the outstanding debt and representing banks holding a further $2.2bn, expressed their support for the deal, the court heard. The group of companies have total debts outstanding of about $6.8bn.
“This is a ‘light touch’ administration that will protect NMC from aggressive creditor action whilst bringing new funding and addressing the level of debt in the business," said Richard Fleming, joint administrator and managing director of Alvarez & Marsal.
"As part of the administration, the administrators have arranged $325m of additional financing to ensure we have sufficient funds to support the business through the Covid-19 disruptions and financial restructuring process. All hospitals, medical centres, care facilities and other operations in the group affected by the administration will continue to operate as they have to date.”
NMC Healthcare is the UAE's biggest private healthcare company with about 15,000 employees and revenue of $1.6bn. Its London-listed parent was placed into administration in April this year after several months of upheaval that began in December last year after US-based activist investor Muddy Waters alleged the company had inflated its cash balances and understated its debts. This led to the appointment of external investigators including a company led by a former director of the US Federal Bureau of Investigations, Louis Freeh.
Investigations found that NMC Health's debts were materially higher than declared in its accounts. They also highlighted "suspected fraudulent behaviour" at the company.
Administrators Alvarez and Marsal set out a three-year turnaround plan with Mr Davis last month, which involved putting its UAE operations into administration through the Abu Dhabi Global Markets Courts to fend off creditor claims and raising additional funding from lenders to allow its UAE and Oman operations to continue to operate. The company currently operates in 12 countries, but other entities in Spain, the UK and elsewhere have been deemed non-core and will be sold or closed.
Over 80 major local, regional and international financial institutions extended credit to NMC, which was founded by BR Shetty in Abu Dhabi in 1975.
“I want to thank all NMC employees, medical staff and physicians for the extraordinary commitment they have continued to demonstrate as we navigated through these difficult months together," Mr Davis said. "I also want to thank our suppliers, insurers and UAE healthcare regulators for the patience and support they have shown to NMC."