Kuwait International Bank agrees to sell debt owed by NMC Health

Healthcare company's $74.11m of loans are being sold to an unnamed buyer for $13.25m

KIB has agreed to cash in its loans to NMC Health at a deep discount before the outcome of a vote by creditors on the company's future. Bloomberg

Kuwait International Bank is recouping some of the money it is owed by NMC Health, the healthcare group founded by BR Shetty that was placed into administration last year, by selling off its debt.

The lender is owed $74.11 million by NMC Health, but agreed to sell the debt for $13.25m, the company said in a statement to Boursa Kuwait, where its shares trade. It did not disclose the name of the buyer and said it had "fully provided" for the debt exposure in last year's accounts.

"The sale will be disclosed once executed and all relevant procedures are completed," KIB said.

Troubles at NMC Health, which grew from a single clinic into the UAE's biggest healthcare provider, began after a report by short seller Muddy Waters in 2019 accused the company of inflating its assets and understating its debt. An independent investigation following that uncovered more than $4.4bn of previously unreported debt and the company was placed into administration in April last year.

In an update to lenders in April, the company's administrator Alvarez & Marsal said it has received about $6.4bn of creditor claims to date, including about $6.3bn from a group of 136 financial creditors.

A further $650m of debt from another 10 main financial creditors was still outstanding and needed to be filed ahead of a deadline at the end of April.

Creditors are set to vote on NMC Health's future on June 15. The administrators are proposing a lender-led restructuring of the group, which would cut its debt to $2.25bn in return for exit instruments that could be cashed in at a future date once the business returns to growth and generates more value.

The proposal needs the support of more than 50 per cent of unsecured creditors. If this is not achieved, then a distressed sale or liquidation would take place . A distressed sale "is likely to yield a significantly lower recovery than a restructuring", administrators said, while liquidation of the business would lead to "little or no recovery" for the bulk of the company's creditors.