Administrators of NMC Health, the largest healthcare providers in the UAE, are looking to achieve either a lender-led restructuring or a sale of the company by April end next year.
Max Frangulov MD – Alvarez & Marsal
“We want to complete this process and deliver the value as quickly as possible. We are trying to get to this point in Q1 2021. 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 in the first half of 2021.”
In April, NMC Health, which was listed on the London Stock Exchange, was put into administration under Alvarez & Marsal, a global professional services firm, after investigators highlighted “suspected fraudulent conduct,” uncovering more than $6.6 billion in debt, far higher than the $2.1 billion reported on its balance sheet. It was soon delisted from the exchange.
The administrators of the company have three key priorities, Mr. Frangulov said, which is saving the company, optimizing creditors’ returns and investigating wrongdoers.
After last week’s secondadministration phase in the Abu Dhabi Global Markets (ADGM) Courts, which offered immunity from local creditor claims and activated a $325 million financing facility from established lenders, Mr. Frangulov said the company is now stable.
“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 reorganization supported by lenders,” he said.
Lenders will be asked to vote on the two choices, as shown by a presentation preceding the call. If it is not possible to agree on a reorganization by the end of February, a sales process will begin, which will conclude by the 30th of April next year.
The company will be recapitalized with $203 million of secured debt under the reorganization and between $325 million and $650 million from an exit facility. Lenders would potentially obtain better returns, but the company would have to wait for a longer time to generate the sufficient earnings to pay back claims. A sales process will provide cash quicker, but revenue is likely to be “much smaller” than under a restructuring process.
Lenders have been told that up to $54.5 million is expected to be realized through the selling and winding down of the NMC Trading company. In order to sell the NMC Trading company, which produced $16 million in cash and reduced payables by $10 million, agreements were made with three distributors, as well as facilitating the transfer of around 600 to 800 employees.
An agreement to sell the assets of NMC Trading, such as cars and warehouse leases, to Abu Dhabi-based Yas Holding for $12 million has also been agreed. A separate $13 million deal for NMC’s Cytomed medical supplies company has also been negotiated with Yas Holding.
“An investigative report will be submitted by December in terms of the pursuit of wrongdoers, outlining details of the fraud that took place and identifying” the perpetrators and any colluding parties,” Mr Frangulov said. In order to recover properties, the report would also propose a legal plan.
“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.
