Image Courtesy: NMC Healthcare Twitter account
NMC Health bowed to creditor demands to be placed into administration, saying it’s in no position to contest Abu Dhabi Commercial Bank’s efforts to install new management.
The troubled Middle Eastern hospital operator said on the eve of a London court hearing that it expects to be placed into administration “in due course.” NMC’s new chairman had resisted creditors arguing that such a move would endanger lives as the coronavirus spreads across the United Arab Emirates.
London-listed NMC, founded by Indian entrepreneur Bavaguthu Raghuram Shetty, had seen its stock plunge before it was suspended from trading amid allegations of fraud.
Most of NMC’s senior management has resigned since it revealed more than $4bn of undisclosed debt. The company was also dropped from the FTSE 100 index.
“Although a setback for regional markets, the outcome of this court process will set an important precedent,” said Ahmad Alanani, chief executive of Sancta Capital, a Dubai-based investor focused on special situations in the Middle East. “We hope that an administration will ultimately cleanse NMC’s balance sheet, identify the culprits behind this staggering default and help the business move past these events constructively.”
With a market value of $2.4bn and total debt of $6.6bn, NMC faces an investigation by the UK’s Financial Conduct Authority.
Abu Dhabi Commercial Bank’s exposure is about $981m, while Dubai Islamic Bank has revealed a $541m exposure to NMC, risking almost half of its annual profit. Abu Dhabi Islamic Bank has reported extending $291.4m to NMC.
In a separate statement, NMC chairman Faisal Belhoul, urged administrators to provide stable management and ensure liquidity to maintain healthcare services.
NMC was the first company from Abu Dhabi to list on the London stock exchange in 2012. The hospital operator’s troubles have renewed concerns about the lack of corporate governance in the UAE where both Abu Dhabi and Dubai in the past decade have transformed into two of the Middle East’s leading financial centres.
The move by the bank echoes that of another financial crisis in the Gulf, where a Kuwaiti fund helped precipitate the collapse of Dubai’s marquee investment firm Abraaj Group by pushing for administration in court.
Meanwhile Abu Dhabi is still grappling with the fallout of the global scandal involving Malaysian sovereign fund 1MDB.