Abu Dhabi, UAEThursday 29 October 2020

NMC restructuring or sale to be concluded by April 2021

A creditor-led reorganisation will lead to higher returns but will take longer to achieve, advisers tell lenders

If lenders do not agree to the terms of a financial restructuring of NMC Health by February next year, a sale process will commence. Victor Besa / The National 
If lenders do not agree to the terms of a financial restructuring of NMC Health by February next year, a sale process will commence. Victor Besa / The National 

The administrators of NMC Health are looking to complete either a lender-led restructuring or a sale of the business by the end of April next year.

Advisers working on the restructuring also expect to achieve non-core asset sales quickly, with firm bids for the Luarmia IVF clinics based in Spain and UK-based private hospitals company Aspen Healthcare by early next month, they said on a call to NMC’s lenders on Wednesday.

“We want to complete this process and deliver the value to you as quickly as possible. We are trying to get to this point in Q1 2021,” Max Frangulov, managing director of administrators Alvarez & Marsal told lenders.

“Obviously, It’s a very complex situation and we have to resolve things that are popping up here and there all of the time, so we are pinning it at the first half of 2021.”

NMC Health is the UAE’s largest private healthcare provider. The company, which was listed on the London Stock Exchange, was placed into administration in April after investigators highlighted “suspected fraudulent behaviour”, uncovering debt of more than $6.6 billion, considerably higher than the $2.1bn recorded on its balance sheet. It was delisted from the exchange shortly.

The company’s administrators had three main objectives, Mr Frangulov said – saving the business, maximising returns to creditors and pursuing wrongdoers.

Following a second administration process in the Abu Dhabi Global Markets Courts last week, which provided protection from local creditor claims and triggered a $325 million funding facility from existing lenders, the business is now safe, Mr Frangulov said.

“We know that it’s going to continue, that it has liquidity to support its operations. And there will be [an] exit from administration, whether it’s going to be a sale of the business or a plan of reorganisation supported by lenders.”

Lenders will be asked to vote on the two options, a presentation accompanying the call showed. If a reorganisation cannot be agreed by the end of February, a sale process will begin, which will conclude by April 30 next year.

Under the reorganisation, the business would be recapitalised with $203m of secured debt and between $325m to $650m from an exit facility. Lenders would likely receive higher returns, but would need to wait for a longer period for the business to generate the necessary earnings to pay back claims. A sale process would provide cash more quickly, but proceeds are likely to be “much lower” than under a restructuring.

Up to Dh200m ($54.5m) is expected to be realised through the sale and winding down of the NMC Trading business, lenders were told. Agreements were made with three distributors to sell the NMC Trading business, which generated Dh60m in cash and reduced payables of Dh40m, as well as facilitating the transfer of about 600 to 800 employees.

A deal has also been agreed to sell NMC Trading's assets, such as cars and leases for warehouses, to Abu Dhabi-based Yas Holding for Dh45m. A separate Dh50m deal has also been agreed with Yas Holding for NMC’s Cytomed medical supplies business.

In terms of pursuing wrongdoers, an investigation report will be filed by December which will outline “details of the fraud that took place" and will identify "the perpetrators and any colluding parties”, Mr Frangulov said.

The report will also recommend a litigation strategy to recover assets.

“What is the size of the prize, if you will, where an opportunity [exists] to get some return of additional funds to the creditors that were defrauded in this process,” Mr Frangulov said.

Updated: October 8, 2020 04:30 PM

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