Dubai: Regaining “operational and financial stability” would be the number one priority for the management at NMC Health, according to the newly confirmed Executive Chairman, Faisal Belhoul.
Simultaneously, the management would “prioritise payments to its healthcare workers and critical suppliers,” Belhoul added, in his first statements to the media since taking on the new role. Belhoul’s investment arms also hold a 9 per cent stake in NMC Health, acquired recently.
The largest private healthcare company in the UAE, NMC operates more than 200 facilities, and has more than 2,200 hospital beds and a staff of 2,000 doctors.
“Under new leadership, NMC Health has the ability and commitment to provide vital healthcare services to the community at this critical time, strengthen the company’s business fundamentals and increase the value of the NMC Group’s business - and consequently returns, to creditors and shareholders,” said a statement issued by the hospital operator on Saturday.
'Standstill' request to lender banks
Banks could show a bit of “patience” and “prudence” on their debt exposures to NMC Health, according to the Executive Chairman.
Belhoul has called for a “temporary standstill” on NMC’s debt obligations to lenders. NMC's overall bank loan exposure is estimated at $6.6 billion - $4 billion more than was there in the books provided by the previous management.
A standstill deal would give NMC’s “new management team” more time to hammer out a recovery plan that “would provide greater value for all parties”.
“There are considerable downsides to the company and its creditors if we were to be placed into administration,” said Belhoul, in his first official comments since taking over as Executive Chairman.
“This would cause instability to the operating businesses of the NMC Group, creating additional pressure on the group’s liquidity and reducing value for all creditors. This would be damaging not only to the interests of creditors but, in the midst of the COVID-19 crisis, would potentially put lives at risk.”
The debt obligations kicked in after the combined shareholding of NMC’s three principal shareholders, including that of founder Dr. B.R. Shetty, dropped below 30 per cent.
Belhoul also said that everything “in his power” would be done to “recover misused funds and ensure those involved in any wrongdoing were prosecuted”.
“I recognise the position in which the NMC Group finds itself and, as executive chairman, I will be undertaking a review to strengthen governance and control structures and achieve operational stability for the NMC Group as quickly as possible,” said Belhoul.
“We are working in full cooperation and in close dialogue with authorities in the UAE and UK, including the UK’s Financial Conduct Authority (FCA), and will vigorously chase down the perpetrators for return of these funds.”
NMC has committed to treating all creditors equally and not taking actions that prejudice the position of certain creditors relative to others, the statement issued Saturday said.
“Departing from these principles by acceding to the demands of any individual creditor would jeopardise the operating businesses of the NMC Group, increasing the risk of customers and suppliers terminating contracts or re-negotiating terms and putting even more pressure on the group’s liquidity,” said Belhoul.
Three months of turmoil
It's been three months and a few days since everything went topsy-turvy at NMC Health. The troubles were set off by a late December report by US investment firm Muddy Waters, which said that the company was not being transparent with the facts in its financial results.
Initially, NMC Health’s then dismissed the claims, but set up an internal investigation to look into the matter. It led to the departure of the then CEO, Prashanth Manghat, in February after irregularities were found in some of the supplier payments.
Thereafter, the internal investigations revealed the existence of first an additional $2 billion plus taken from banks, and which was again added to recently. In all, NMC’s total obligation to lenders is $6.6 billion and change.
The fact is that the Board of Directors had no clue about the additional $4 billion that is now on its books. As to what those funds were used for and why is what the investigations could unearth.
Most of the erstwhile senior management at NMC Health are no longer in the country, including, reportedly, the ex-CFO, Prashant Shenoy.
The current Board of Directors has appointed PwC to advise on liquidity and operational matters and also brought in Moelis to be an independent financial advisor to determine the extent of - and assist in the restructuring of - the NMC Group’s debt.
* Faisal Belhoul is the founder of Ithmar Capital Partners and currently serves as its chairman.
* He also founded Amanat Holdings, one of the GCC's largest integrated healthcare and education investment companies. Belhoul was also chairman of the board for the UAE Private Hospitals Council and the Pharmaceutical and Healthcare Equipment Business Group.
* He and was a board member of Al Noor, the UAE based healthcare company listed in London.
The group is currently treating “hundreds suspected of having COVID-19”. In the UAE, NMC hospitals and affiliate clinics have “screened more than 10,000 workers for the virus in partnership with the Ministry of Health and Prevention and the Ministry of Human Resources and Emiratisation,” the statement added.
“The screening programme will include 90 staff testing as many as 200,000 labourers across the northern emirates.”
Belhoul also had a word of praise for the doctors, nurses and other healthcare professionals at NMC. “I commit to showing the same levels of support for our team as they show for their patients. The service they provide is invaluable, and their contribution to this country cannot be overstated.”