Abu Dhabi hospital operator NMC Healthcare comes under new ownership led by ADCB


Dubai: After nearly two years, Abu Dhabi hospital operator NMC Healthcare is finally emerging out of court-appointed administration. This means that a group of creditors – led by mega-bank ADCB – will assume ownership of the UAE’s biggest private healthcare company and will continue to do until it finds a new owner. There will be no disruption to the ongoing trading of the NMC Group.

It also means a new chapter for NMC Healthcare, which started life as a venture launched by B.R. Shetty, who is currently residing in India.

However, NMC Healthcare ltd – along with NMC Holding ltd – will remain in administration in order to continue to investigate and pursue litigation claims, any proceeds of which will be distributed to the relevant creditors. “The Group has benefitted from a bedrock of creditor support, as evidenced by a $325 million funding facility,” said a statement.

ADCB’s rights

As the entity with the highest exposure, Abu Dhabi Commercial Bank received 37.5 per cent of transferable exit instruments in a $2.25 billion facility issued by the new NMC holding company. This follows the completion of the debt restructuring process and a successful exit from the administration.

The core healthcare operating entities of NMC in UAE and Oman exited Abu Dhabi Global Market (ADGM) administration on March 25 and were transferred to NMC HoldCo SPV ltd. (Earlier, NMC Healthcare said it was selling its 53 per cent stake in the Saudi operations as part of selling all non-core assets).

The Bank has appointed three of the seven members of the board of the new company, who will work with CEO Michael Davis to implement a strategy for the growth of the business. Kevin Taylor, Group Treasurer at ADCB, becomes Chairman and Jean-Marc Le Jeune and Bassem Itani are non-executive directors.

“The successful implementation of the restructuring plan, which was overwhelmingly approved by eligible creditors on September 1, 2021, follows a series of proactive measures taken by ADCB to rescue NMC in response to developments at the company in early 2020, including the revelation of previously undisclosed liabilities of over $4 billion.”

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Michael Davis of NMC, said: “Our teams have continued to deliver service excellence through the most challenging of times, playing a key role in the UAE’s world-leading response to the pandemic.
Image Credit: Gulf News Archive

“Today, we exit administration with a renewed sense of purpose, a clear direction, a strong focus on who we are here to serve and an unwavering commitment to driving the future growth of NMC, strengthened by the support of creditors and a new, highly qualified, and cohesive Board of Directors,” said Michael Davis, CEO of NMC. “We emerge today stronger, more resolute and resilient than ever and ready to chart our new path.”

$7b

That’s the extent of the claims against the NMC Group.

The new ownership structure will be trying in these two to three years to get back those funds and also prepare the hospital operator for an eventual sale.

Coming under administration

Following a series of devastating revelations about fund diversion, which brought down the previous management, NMC Group came under administration, first ordered by a UK court and then by Abu Dhabi’s Abu Dhabi Global Market. The push for court intervention came from ADCB, which was the biggest creditor to NMC in the past.

Overall claims against NMC are reportedly just under $7 billion. The UK consultancy of Alvarez & Marsal was brought in by the court to see it through administration.

Stock - NMC
Image Credit: Bloomberg

“There were moments over the past two years where it was uncertain if NMC would survive,” said Richard Fleming, Managing Director of Alvarez & Marsal Europe and Joint Administrator of UK-based NMC Health plc and Abu Dhabi-headquartered NMC Healthcare.

“So to be able to hand over 34 companies to a New NMC Group under creditor ownership, as thriving healthcare businesses, is a remarkable achievement.”

As NMC goes about its business of serving clinical customers in the UAE and delivering value to its stakeholder communities, its future looks very bright indeed.

– Richard Fleming of Alvarez & Marsal Europe

A longwinding process

As Fleming says, there were quite a few occasions when it seemed that the sheer size of the claims against the Group will overwhelm any rescue effort. Bringing all the creditors on board – and agree to a longer duration for the recovery of their claims – proved quite onerous.

Finally, the contours of an agreement were put together, as well as support from NMC suppliers who were owed as well.

The transition to a creditor-owned structure was supposed to have happened earlier, but some glitches had to be ironed out. Finally, on March 25, all of those details were hammered out – and the process of change was complete.

12,000

The workforce coming under the new NMC Group. It will have 65 healthcare facilities and 38 pharmacies

What makes up new NMC Group?

The operating companies that have exited administration, and are now held by NMC, represent the “largest integrated healthcare platform in the UAE and the third largest in Oman”, with over 12,000 employees serving 5.4 million patients annually. The company owns 65 healthcare facilities with 1,400 hospital beds, as well as 38 pharmacies.

What happens to Shetty, former management?

With the debt restructuring out of the way, all attention will be on how to get back the funds that were diverted in the years leading up to late 2019/early 2020.

Investigations and finding the exact claims was taken up simultaneously in these two years. Now, the process will step up a gear as ADCB and others pursue those claims and investigations vigorously. Most of the erstwhile NMC management are out of the country, including the former CEO.

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B.R. Shetty founded NMC as a one facility operator in the mid 1970s. He is currently in Bengaluru, India.

Through the last two years, with constant worries dogging it on the financial side, NMC turned itself around on the operations side. It’s financials for 2020 showed resilience, and it played a key role in handling COVID-19 related cases.

The sale of the Saudi operations sees a company that is doubling down on the UAE and Oman – and with a clearer path to full-scale recovery. And keep pushing for the reclaiming of those billions in dollars that were diverted by the previous management.



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Divyansh Singh

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