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For NMC Healthcare, the DIB settlement signifies a milestone moment as it transitions to full-scale recovery from its legacy issues. Image Credit: Bloomberg

Dubai: The UAE hospital operator NMC Healthcare has reached a settlement on all legal disputes with Dubai islamic Bank, one of its key lenders in the past.

The out-of-court settlement relates to 'all litigation, current and pending, between the parties, and related third-parties'.

This will be a major breakthrough for NMC, headquartered in Abu Dhabi, and which has been operating under a new structure ever since the previous management was ousted following the launch of investigations and court proceedings. 

"The new and restructured NMC Healthcare and DIB entered into a global settlement agreement that addresses and amicably resolves the parties’ legacy disputes arising from the old NMC Healthcare’s entry into an administration and restructuring process," said a statement.

NMC was launched in the mid-1970s by B.R. Shetty and who had been the chairman through the subsequent decades until February 2020. In late 2019, revelations came about that lead to the discovery of billions of dollars in banks' funds being diverted. Investigations are continuing. 

Cash and 'Holdco notes'

DIB will receive cash consideration and 'Holdco notes' in settlement of certain claims as part of the resolution.

The 'holdco notes' are instruments that were issued to legacy creditors in exchange for their admitted claims, pursuant to the Abu Dhabi Global Market restructuring voted for by those creditors in September 2021.

NMC Holdco owns the restructured NMC operating companies through its wholly-owned subsidiary, NMC Opco Ltd, which is also incorporated in the ADGM.

NMC Opco owns and operates 85 healthcare facilities in the UAE and the region.

What the NMC Healthcare-DIB deal does
The settlement provides that all parties will 'cease and discontinue' all current proceedings between them - with no admission of liability made by any of the parties.

NMC was represented by Quinn Emanuel Urquhart & Sullivan UK LLP’s London office and Reed Smith LLP’s UAE office. DIB was represented by Eversheds Sutherland LLP’s UAE and UK offices and Habib Al Mulla in the UAE.

'Economic owner'

DIB will thus become an 'economic owner' of NMC Holdco SPV Ltd, NMC’s new holding company, which is incorporated in the ADGM, under a deed of company arrangement.

NMC Healthcare, which operates some of the biggest hospitals in the UAE, has been on a comeback trail under the new management structure. It is operated by ADCB, which had the highest exposure to the entity under the previous management, and other lenders-creditors.

At the time, Dubai Islamic Bank opted out and had pursued legal action. This is what ends now after the settlement.

'Amicable' legal deal

“This amicable settlement and resolution is to both parties’ mutual benefit, enabling NMC to remain focused on providing vital healthcare services to millions of patients across the UAE annually," said a joint statement issued by NMC and DIB. 

"NMC looks forward to working in close partnership with DIB once more, and DIB looks forward to working with NMC as a supportive and valued stakeholder, creating a win-win situation for both organisations.”

While NMC no longer provides its financials, the impression from banking and local healthcare sources is that the entity is on firm ground now. The new management had brought in extensive restructure of operations, raised cost efficiencies and also expanded with new healthcare facility openings.

Banking sources rate it as the biggest corporate turnaround in the UAE, which should lead to an eventual sell-off to a new owner at some point.