NMC Health creditors presented with restructuring proposal

Administrators Alvarez & Marsal have so far received about $6.4bn of claims, with potentially $650m more to come

Creditors need to vote on administrators' restructuring proposals for NMC Health by June 15. Victor Besa / The National

The administrators of NMC Health outlined a restructuring plan to lenders owed about $6.4 billion by the company, which would lead to more than $4bn of its debts being wiped out.

Joint administrators from Alvarez & Marsal outlined a Deed of Company Arrangement plan which would mean lenders agreeing to compromise their claims in return for exit instruments in a new holding company, with a view to achieving a "controlled" exit from the company within three years.

A presentation to lenders stated that administrators have so far received 927 claims from creditors, but there are 10 other "main financial creditors" that have yet to file before a deadline at the end of this month, which could add a further $650m to the total.

NMC Health was founded by BR Shetty in 1975 and grew to become the biggest privately-owned healthcare company in the UAE, employing more than 20,000 staff. However, it was placed into administration in April last year following the discovery of more than $4bn worth of previously undeclared debts at the group.

The restructuring proposal involves lenders agreeing to reduce the group's debt to a more manageable level of $2.25bn in return for exit instruments. If approved, this would allow for 35 out of the 36 businesses placed into administration in Abu Dhabi Global Market in September last year to be restored as going concerns. Creditors need to vote on the plan by June 15.

Administrators have been running a sale process of the group in tandem, and said if restructuring proposals do not get sufficient support, it will be sold but this "is likely to yield a significantly lower recovery".

The sale of the core business assets to a single buyer would likely be "at a distressed price" and could incur significant additional costs to transfer licences and assets, with the process taking 6-12 months.

If neither a restructuring or a sale can be agreed, the group would have to be liquidated, immediately ceasing trading and assets sold "piecemeal on an accelerated time frame". If this were to happen, there would be "little or no recovery for unsecured lenders", creditors were told.

Administrators said trading so far this year "has continued to be strong" with the number of patients treated increasing by 20 per cent year-on-year. Gross revenue for its core UAE and Oman healthcare business 14 per cent ahead of its business plan, they added.

“NMC is proving what a strong business it is," joint administrator Richard Fleming said. "The recent outperformance of the business plan reflects this."