Abu Dhabi Commercial Bank (ADCB) has applied to the High Court in the United Kingdom for the appointment of joint administrators to safeguard the future of NMC Health PLC and its subsidiaries. Image Credit: Gulf News

Dubai: Abu Dhabi Commercial Bank (ADCB) has applied to the High Court in the United Kingdom for the appointment of joint administrators to safeguard the future of NMC Health PLC and its subsidiaries (NMC Health Group).

The bank said in a statement on Saturday that it made the application on April 2 and the NMC Health PLC was served notice of this action on the morning of 3 April 2020.

NMC Health Group, which is listed on the London Stock Exchange, was a constituent of the FTSE 100 Index and has operations in 19 countries, has recently revealed previously undisclosed liabilities of over $ 4 billion since the publication of interim reviewed financial statements as at 30 June 2019, as well as suspected irregular activities and misrepresentations in relation to the company’s past financial activities, the ADCB statement said.

“As a significant stakeholder in NMC Health Group, ADCB is committed to protecting its interest and assuring the long-term sustainability of the company as well as its operational effectiveness and non-disruption of its operations, and the Bank will pursue a course of action that supports these aims,” ADCB statement said.

The bank on Thursday said in a statement that the bank’s exposure to NMC Group of companies is approximately $981 million (Dh3.6billion).

“The company’s (NMC’s) liabilities to the bank totaled approximately $981 million as at 31 March 2020, which represents less than 1 per cent of the bank’s total assets,” ADBC said in a statement.

According to ADCB, the credit was provided to the NMC Health Group through a combination of facilities extended by ADCB, as well as by Union National Bank (UNB) and Al Hilal Bank prior to the merger of the three banks in May 2019.

The bank said it is currently not in a position to quantify anticipated impairments at this time due to rapidly evolving developments at the NMC Health Group.

Co-ordination with other creditors

The bank said it continues to coordinate closely with a number of the substantial creditors of NMC Health Group. The company has an exposure to over 80 major local, regional and international financial institutions.

Given the reported irregular activities, and NMC Health Group’s defaults on its various debt commitments, ADCB, as a substantial creditor, had demanded that NMC Health Group’s Board of Directors undertake remedial actions to preserve the value of the business, and to ensure that NMC Health Group would be managed with enhanced transparency and improved corporate governance in the interests of all stakeholders. However, NMC Health Group failed to respond adequately to these reasonable requests from ADCB.

If approved by the High Court, the joint administrators will take immediate control of the company’s business. The administrators will also launch a full, transparent and independent investigation into the reported suspected irregular activities at the company and the misrepresentations in relation to its past financial activities.

“ADCB appreciates the essential role that the NMC Health Group plays in our communities, particularly during the current challenging circumstances. ADCB would like to express its gratitude and support to NMC Health’s doctors, nurses and other critical care providers and employees, who continue to work tirelessly to deliver uninterrupted healthcare services in difficult circumstances,” the bank’s statement said.

NMC’s known debt pile has reporterdly more than tripled in recent weeks to $6.6 billion, up from the $2.1 billion reported at the end of June. Following suspected fraud and financial irregularities the company’s chief financial officer and chairman have resigned.

NMC Executive Chairman issues rejoinder to ADCB
“I call on ADCB to accept my invitation to participate in a transparent and open dialogue with all lenders, which I have advocated from the start, rather than imposing its will at the risk of jeopardising our operations.

“I want to make clear that I am fully supportive of ADCB’s calls for increased governance and am willing to make radical governance changes if and where they are merited. I have made it clear in my communications to them that there is an open invitation to ADCB to play a significant role in the restructuring of the company and that I am willing to appoint additional advisors who can bring value to this process.
"In similar vein, the previous management has been removed, and following my recent appointment as executive chairman, we are open to making appointments to augment the new board – including individuals from or recommended by ADCB and the other lenders. All of which I have made very clear in my communications to ADCB, which remain unanswered.

“There would be considerable downsides to the community, the country, the company and its creditors if we were to be placed into administration. NMC’s healthcare facilities and professionals are on the front lines of the fight against COVID-19. By repeatedly refusing invitations to participate on a prospective committee of lenders to decide on the best way forward, and by disregarding the principles of the informal standstill to which several significant fellow lenders have in principal been working with, ADCB is putting its own interests above not only other creditors, but also the health and safety of UAE residents amid an escalating pandemic.”