Dissolution or liquidation 'likely' options for NMC Health

Joint administrators appointed by UK court issue a document on the investigations

An emergency department sign sits on display outside the NMC Royal Hospital, operated by NMC Health Plc, in Abu Dhabi, United Arab Emirates, on Sunday, March 1, 2020. Troubled NMC Health Plc, the largest private health-care provider in the United Arab Emirates, asked lenders for an informal standstill on its debt as Abu Dhabi weighs an injection of capital to safeguard the emirate’s reputation among global investors. Photographer: Christopher Pike/Bloomberg

Embattled firm NMC Health could be either liquidated or dissolved, according to the administrators appointed by the UK court.

“We consider it prudent to retain all the options available to us to bring the administration to a conclusion in due course. However, we currently anticipate that the most likely exit routes will either be dissolution or liquidation,” the joint administrators Alvarez & Marsal said in a document.

However, it will be “dependent on dividend prospects and/or whether a liquidator would be required to pursue certain legal actions or take other action within a liquidation process.”

The administrators are currently keeping all options open as potential exit routes for NMC Health.

“At this early stage, until all investigations are progressed and the liability position of the company is established, it is not possible to conclude which exit route will be most appropriate for the administration.”

A UK court placed NMC Health into administration on the application of Abu Dhabi Commercial Bank (ADCB), its biggest creditor last month. ADCB has an exposure of $981 million (Dh3.6 billion) to NMC. Overall, UAE banks have a combined exposure of at least Dh8bn to the healthcare firm.

ADCB also initiated criminal legal proceedings with the attorney general in Abu Dhabi against the company’s founder BR Shetty and a number of other individuals.

On March 10, NMC announced its debt position was $5bn, materially above the last reported numbers of $2.1bn and on March 23, it said the debt was estimated to be around $6.6bn.

Over 80 major local, regional and international financial institutions extended credit to NMC, which was founded by Mr Shetty in Abu Dhabi in 1975, and now employs more than 2,000 doctors and about 20,000 other staff.

The company operates 2,200 hospital beds as well as clinics and pharmacies in 19 countries.

NMC has made a series of damaging disclosures in the past few months after a report by activist investor Muddy Waters in December alleged it inflated cash balances, overpaid for assets and understated its debt.

The joint administrators also said they “are reviewing the affairs of the company to assess whether actions can be taken against individuals and/or third parties to increase recoveries for creditors.”

“In light of the reports of undisclosed borrowing and suspected fraud, this will require utilising its own records, those of the group and a number of parties, including banks, advisers, connected parties and third parties across multiple jurisdictions.”

“At this point in our work, given the uncertainty of what we might find, it is not possible to provide an accurate prediction of the time and cost required to complete the investigation. However, it should be expected to require significant resource over a period of time.”