Creditors owed more than $6.4 billion by UAE healthcare group NMC Health agreed to a restructuring of the business.
Joint administrators Alvarez & Marsal said it received enough firm commitments from creditors to embark on a restructuring, which will lead to billions of dollars worth of debt being expunged in return for equity instruments under a legal process known as Deeds of Company Arrangement. It will now begin a formal voting process to complete the restructuring.
“The resounding level of support from creditors reflects the positive sentiment towards the collective approach we have taken throughout this process to ensure the group optimises value for creditors," joint administrator Richard Fleming said. "This is a hugely significant moment in the restructuring process of the group and provides another layer of stability as we move onto the next chapter for NMC.”
NMC Health grew from a single clinic into the UAE's biggest healthcare provider, but after a report by short seller Muddy Waters in December 2019 accused the company of inflating its assets and understating its debt, an independent investigation uncovered more than $4.4bn of previously unreported debt, leading to the company being placed into administration in April last year.
In an update to lenders in April this year, Alvarez & Marsal said it had received about $6.4bn of creditor claims to date, including about $6.3bn from a group of 136 financial creditors. Administrators had also identified a further $650m of potential claims from another 10 financial creditors.
Administrators urged lenders to vote for the DOCA plan, which will bring the group's debt pile down to a more manageable $2.25bn, with a mechanism allowing for them to benefit from an eventual exit that generates more than that amount.
In a presentation to lenders, administrators argued that such a restructuring would be preferable to a distressed sale or liquidation.
A distressed sale was "likely to yield a significantly lower recovery than a restructuring", administrators said in the document, while liquidation of the business would lead to "little or no recovery" for the bulk of the company's creditors.
Administrators are continuing to pursue claims against the company's former auditor, EY, and its former directors and shareholders in a bid to recoup some of the missing sums from the business. In a report last month, they said more than 19 million records of information from the group and third parties have been added to its investigation database and "millions" of accounting entries continue to be analysed.