Dubai, April 15, 2020: Abu Dhabi based NMC Health, once owned by B R Shetty has been placed under the UK court’s supervision. The court will now appoint administrators to oversee the whole management and operations of the UAE’s largest healthcare operator.
The existing Board of Directors of NMC "cease to have decision-making powers with immediate effect". These powers transfer to the Administrators who are responsible for the day-to-day running of NMC.
But "all hospitals, medical centres, care facilities and other operations in the group are not subject to the administration procedure - so their current activities will not change," a statement issued Thursday confirmed.
A court in the UK came into the picture because NMC Health is listed on London Stock Exchange, and thus bound by UK rules governing public companies. It listed on the LSE in 2012.
This follows an appeal filed by ADCB with the UK court for “joint administration” of NMC Health, after it was found that the hospital operator had $6.6 billion in bank debt and was in no position to pay it off.
UAE banks combined have exposures of Dh10 billion plus, with ADCB having the highest at Dh3.6 billion.
In a statement after the UK court ruled in favour, ADCB issued a statement: “ADCB and other key creditors have concluded that an administration process is the most suitable route to ensure a rescue and turnaround of NMC Health PLC and its subsidiaries.
“And to assure continuity of operations for patients, healthcare workers and other stakeholders. An administration is a process designed for a rapid business recovery and is therefore distinct from liquidation.
"The true picture of the financial difficulties faced by NMC only became apparent through a series of announcements by the Company since February 2020, including the uncovering of over $4 billion of previously undisclosed debts," ADCB said in a statement immediately after the UK court order.
"Contrary to the information the Group provided to ADCB and in breach of the various loan covenants and commitments, following these revelations, the Bank learned that it was among over 80 major regional and international financial institutions that extended credit to the Group."
Not on, but…
This position was contested by Faisal Belhoul, who had taken over as Executive Chairman, less than two weeks ago at NMC Health. He had said repeatedly these past few days that a company getting placed under administration would lead to value destruction.
But with new revelation of NMC’s overall perilous debt position. There were few takers among the banks to take up Belhoul’s position.
Even then, efforts were on until Wednesday to try and get ADCB to change its mind on joint administration. But late on Wednesday, Belhoul threw in the towel, stating that with no deal likely with ADCB, being placed under administration was the only option.