Abu Dhabi’s NMC Healthcare to show track record for new owner in time

NMC is currently managed by a group of its creditors led by ADCB, which is owed billions of dirhams.

This came about after Alvarez and Marsal, which was administering NMC, passed on operational control to the group of creditors. (NMC was founded by B.R. Shetty in the mid-1970s and emerged over the decades to be the UAE’s biggest private healthcare operator.)

Now, over the coming months, NMC will go through the process of continuing to strengthen its operations and finding a new owner to take it into a more assured future. There is also the process going on of finding ways to return the missing billions and take action against offenders.

Sell later

Gilbert, who served as NMC CFO during the administration years, says more time is needed between now and selling to a new owner, as opposed to finding one when still under administration. “Regardless of how well it’s performing, there’s always a discount to value because of the nervousness about its long-term health,” said Gilbert, who is the Head of Turnaround and Restructuring and Co-head of A&M’s operations in the Middle East.

“And (there’s) nervousness for suppliers and customers about how and when it’s going to exit administration. Therefore, giving a company a two- to three-year period to build and demonstrate a track record outside of administration is going to achieve a greater value.

“That increased value will be to the benefit of NMC’s creditors.”

Operationally solid

In these two years, NMC has rebuilt its foundations on the operational side. It managed to retain key healthcare personnel, kept expanding into specialty care, and sold non-core interests outside the UAE and Oman. At this point in time, NMC is very much a systemically important player in UAE’s healthcare space.

“There has been no equivalent restructuring of that size or complexity in this region that has been carried out in such a short space of time – less than two years – allowing the company to move on and get back to what it does best, which is serving its patients,” said Gilbert. “A&M was not the only advisory firm involved – it was a real team effort with a number of other advisors, both legal and financial.”

Plan B?

A&M had helmed an extensive round of talks with NMC creditors, sounding them out at each point on what’s being done and the choices for a way forward out of the financial entanglements. If a majority of creditors had not agreed, NMC would have had to be sold earlier - and which would have been akin to a firesafe. In other words, not able to realise enough value.

“We consulted throughout with a group of sophisticated creditors. They, like us, were focused not only on the financial outcome but also the protection of a healthcare business that is intrinsic to the UAE,” said Gilbert.

Post exiting administration, “we have a small number of people that are assisting in the handover process, specifically with the finance and operations elements. However, most of the work within the company itself we have completed and exited.”

“For instance, my role was as Interim CFO, and I handed that over almost immediately once the new board took control. Most of the people that were working with me also exited very quickly after a brief handover. “Although administration allowed the business to avoid total collapse by providing a moratorium to give space to restructure the group, it also brings a significant administrative burden. Broadly, the rigour and resulting governance requirements of a court process - which the team brought to a difficult situation, so the handover was a relatively straightforward exercise once that burden was lifted.

“Nevertheless, the work of the joint administrators that my colleagues in London are primarily dealing with continues in relation to litigation matters.”