NMC Health's new executive chairman Faisal Belhoul urged the company's creditors to give him time to steer the company out of trouble as its biggest lender, Abu Dhabi Commercial Bank, seeks to appoint administrators.
ADCB on Saturday said it approached the High Court in the UK for administrators to be appointed to NMC Health to "safeguard the future" of the company.
Given the reported irregular activities at the company and its defaults on various debts, ADCB said it had sought remedial action from the board and called for the company to be managed "with enhanced transparency and improved corporate governance in the interests of all stakeholders", it said in a filing to the Abu Dhabi Securities Exchange, where its shares trade.
"However, NMC Health failed to respond adequately to these reasonable requests from ADCB," the lender said, leading it to seek the appointment of administrators.
The application to the UK's High Court will lead to the immediate appointment of joint administrators, if successful. ADCB reported a $981 million (Dh3.6 billion) exposure to the healthcare firm on April 2.
Such an outcome "would cause instability to the operating businesses of the NMC Group, creating additional pressure on the group’s liquidity and reducing value for all creditors", Mr Belhoul argued in a separate statement. "This would be damaging not only to the interests of creditors but, in the midst of the Covid-19 crisis, would potentially put lives at risk.”
UAE-based NMC Health has a chain of healthcare facilities with more than 2,200 hospital beds and a staff of 2,000 doctors in 20 countries.
The company made a string of damaging revelations in the last few months following a report by activist investor Muddy Waters in December, which alleged the company had inflated cash balances, overpaid for its assets and understated its debt.
Since then, several key board members, including founder BR Shetty, who set up the business in 1975, have left the firm. Its former chief executive, chief financial officer and a member of its treasury division have also stepped down.
The company revealed its debt, at $6.6 billion (Dh24.24bn), is substantially higher than the $2.1bn declared in its last filed accounts. A review committee also discovered evidence of "suspected fraudulent behaviour".
Mr Belhoul, who became executive chairman on March 26 after his Dubai-based private equity firm Ithmar Capital acquired a 9 per cent stake in the business, pledged the company would treat all of the company's creditors equally and not take action that would prejudice the position of one group over another, he said.
“Departing from these principles by acceding to the demands of any individual creditor would jeopardise the operating businesses of the NMC Group, increasing the risk of customers and suppliers terminating contracts or re-negotiating terms and putting even more pressure on the group’s liquidity,” he said.
A new management team would improve governance and control structures, as well as achieving operational stability "as quickly as possible”, Mr Belhoul said.
The new chairman also said he would do everything he could to recover misused funds and ensure those involved in any wrongdoing were prosecuted.
“We are working in full cooperation and in close dialogue with authorities in the UAE and UK, including the UK’s Financial Conduct Authority, and will vigorously chase down the perpetrators for return of these funds,” he said.
NMC Health had already hired a number of advisors prior to the appoint of new chairman. PwC is advising the firm on liquidity and operational matters, while Moelis is acting as independent financial advisor to determine the extent of restructuring of debts required.
The company's most recently-filed financial results for the first six months of 2019 showed a net profit of $138.1m on revenue of $1.24bn.
ADCB said that it was "committed to protecting its interest and assuring the long-term sustainability of the company as well as its operational effectiveness and non-disruption of its operations".
The lender said it would "pursue a course of action that supports these aims" and would continue to coordinate with a group of substantial creditors. It said NMC Health has exposure to over 80 major local, regional and international financial institutions.