UAE hospital group NMC to file for administration in Abu Dhabi

Dubai: NMC Healthcare LLC plans to file for administration in Abu Dhabi, the UAE-based hospitals operator said on Wednesday, as it targets a three-year recovery plan involving a debt moratorium, debt restructuring and asset sales.

Its London-listed holding company NMC Health Plc is already being run by administrators Alvarez & Marsal after going into administration in April following months of turmoil over its finances.

NMC Healthcare LLC plans to file for administration with the Abu Dhabi financial centre ADGM, it said in a presentation posted on its website on Wednesday.

Alvarez & Marsal will also be appointed as administrators of the UAE business, it said.

"We are looking to move there as soon as we can," Marija Simovic, managing director of Alvarez & Marsal told Reuters, saying the administrators were working with lenders.

The administration process is similar to a Chapter 11 proceeding in the United States and will allow NMC to seek a debt restructuring deal with dozens of lenders and sell assets to strengthen its balance sheet.

NMC's implosion this year amid allegations of fraud and the disclosure of more than $4 billion in hidden debt has left some UAE and overseas lenders with heavy losses and prompted legal battles to try and recover money owed.

NMC Health is the largest private healthcare provider in the UAE, operating more than 200 facilities including hospitals, clinics and pharmacies.

As part of its restructuring plan, NMC and its lenders will have until Jan. 30, 2021, to deliver a binding reorganisation plan or the process will move to core asset sales.

Negotiations will begin soon and a term sheet will be delivered to lenders by Oct. 31, NMC said.

NMC has agreed to terms with existing lenders to raise up to $300 million to fund the business as it prepares to enter administration.

NMC said significant cash has been extracted from the company, resulting in constrained liquidity and payment defaults to lenders and suppliers.

The presentation said based on initial assessments of its first-half 2019 accounts, the preliminary view is that net revenue and EBITDA were overstated by 24% and 178%, respectively. A full year audit was not completed by auditor EY.

The business had a strong start to the 2020 year, but the outbreak of the new coronavirus led to significant declines in revenue and EBITDA from March to May.

Performance started to improve in June, with both June and July performing better than forecast, it said.