Abu Dhabi's biggest healthcare company is heading for administration as the company revealed it had been unable to secure a standstill agreement on its debt from lenders.
An application had been made to appoint administrators by the company's biggest creditor, Abu Dhabi Commercial Bank, last week, with a hearing date set for the UK High Court tomorrow. The company had requested more time to restructure its debts, but said on Wednesday evening that "notwithstanding strenuous efforts to address creditors' concerns, it has not been able to secure their alignment and support".
The company "has been advised by its counsel that it is not in a position to oppose the application successfully" it said in a statement to the London Stock Exchange. "Accordingly, it expects the company to be placed into administration in due course."
NMC Health 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.
Last month, the company said its debt stood at $6.6 billion (Dh24bn), substantially higher than the $2.1bn declared in its last filed accounts. A review committee also discovered evidence of "suspected fraudulent behaviour".
Following the disclosures, two joint non-executive chairmen, including the group’s founder, BR Shetty, an executive vice-chairman, a chief executive, chief financial officer and a member of the company’s treasury department all departed from the firm.
Faisal Belhoul, who became executive chairman of the healthcare group on March 26 after his Dubai-based private equity firm, Ithmar Capital, secured a 9 per cent stake, had been attempting to secure a standstill agreement with lenders, promising improved governance and transparency.
However, his bid to save the firm appears to have come too late.
NMC Health owes money to more than 80 local, regional and international lenders, according to a disclosure from ADCB, which is owed $981m.
Mr Belhoul had argued administration would cause instability to NMC’s operations, which, “in the midst of the Covid-19 crisis, would potentially put lives at risk”, he said in a statement on Saturday.
He had requested more time from lenders to embark on a turnaround.
"Since obtaining an accurate picture of NMC's situation requires input from third parties and extensive forensic accounting, we appreciate the patience of creditors as we work as quickly as possible to gather and analyse this information," he told The National.
NMC Health was founded by Mr Shetty as New Medical Centre in Abu Dhabi in 1975. The company had grown to become a major enterprise, treating more than 8.5 million patients annually through its chain of hospitals, clinics and pharmacies. The business, which has operations in 18 countries, employs more than 2,000 doctors, 20,000 other staff members and has more than 2,200 hospital beds.
In a statement on Saturday announcing it had applied for administrators to be appointed, ADCB said it was taking action "to safeguard the future of NMC Health and its subsidiaries".
The lender said that given the reported irregularities at the company and the fact it had defaulted on debts, it had "demanded that NMC Health Group's board of directors undertake remedial action", including improvements in transparency and corporate governance.
"However, NMC Health Group failed to respond adequately to these reasonable requests from ADCB," the statement said.
ADCB said it expects joint administrators to "launch a full, transparent and independent investigation" into the company's affairs and the misrepresentation of its finances.
It also thanked the company's staff and said it "appreciates the essential role that the NMC Health Group plays in our communities, particularly during the current challenging circumstances".