The future of NMC Health starts a new chapter - March 9 is the final date for submission for investors interested in acquiring Abu Dhabi based healthcare operator. Image Credit: Gulf News Archive

Dubai: There are four interested parties in the fray to acquire NMC Health with the deadline set to end today for submissions. One or two more potential investors could still throw in their bids in the few hours left, according to informed sources.

Among the four bids, one is from Abu Dhabi investment powerhouse Mubadala, another is from Hussain Sajwani of Damac, and a third from GKI, an Italian healthcare focused firm.

Hussain Sajwani
Hussain Sajwani has been a canny investor, most recently acquiring luxury label Roberto Cavalli. He has been buying NMC Health shares from the open market. Image Credit: Gulf News Archive

As per London Stock Exchange rules, there’s a 28-day window for official bids to be made after a listed company first announces that a bid was made,” said a senior source at a local bank. “It’s been 28 days since NMC announced that it had received bids from KKR and GKI. KKR has since said it’s no longer interested.

“But there are other parties who definitely are – NMC remains the biggest healthcare operator in the UAE; it has regional aspirations and it is profitable.

“The debts of $2 billion are what is going to be an issue; plus the lack of clarity on the exact holdings of its three principal shareholders, including that of the founder Dr. B. R. Shetty.”

LSE requirements

All takeover bids need to be formally submitted to NMC by close of business on March 9. “You never know – a new offer could still be made,” said another source.

Incidentally, NMC Health shares on London Stock Exchange are still in temporary suspension. But outside of the stock exchange, the company’s shares are being actively sought.

Mubadala Investment Company
The fortunes of NMC Health could well be decided by Abu Dhabi powerhouse Mubadala, one of four bidders in the fray to take over the ailing hospital operator.

In recent days, news came out that a “custody” bank, which was holding NMC shares pledged to it by one of the principal shareholders, had sold some of it.

It is believed that they were sold for 12.5 pounds a share, above the 10 pounds that the shares were quoted on LSE before they were suspended.

Since December, there have been other instances of banks selling off such blocks of shares belonging to Dr. Shetty and former vice-chairman Khaleefa Butti Omair Yousif Ahmed Al Muhairi, and Saeed Mohamed Butti Mohamed Khalfan al-Qebaisi.

It is now believed that the three own less than 10 per cent of shares in NMC from the once lofty holdings of 40 per cent plus.

“A lot of NMC shares are with custody banks and these are being sold off block by block,” said a shareholder. “Some serious investors are mopping up these shares in the open market. As per London Stock Exchange rules, anyone who has bought 1 per cent or more has to officially make it known.”

Operationally strong and yet…

While all of the attention has been cornered by NMC’s shareholders and potential buyers, less of it has been paid to how NMC is managing its day-to-day operations. “So far, none of the steady stream of news has affected NMC on operations – February proved an exceptionally good month and March looks the same,” said a senior staff member at one of the hospitals.

“There are still recruitments being done to ensure the best doctors are available to treat our patients.”

But the February payment of salaries is yet to be completed – “About 85-90 per cent have got their salaries, and that includes all of the key operational staff,” said a source. “The rest - senior executives and specialist doctors - will soon get theirs as well.”

There are still problems that need resolution, which is why NMC has asked its lender banks for a standstill on its debt obligations.

NMC Interim CEO Michael Davis
Michael Davis, interim CEO, has a lot on the plate. But first up, he will need to reach a workable solution with the lender banks.

Restore line of credit

“NMC Health needs access to funds to handle its month to month operations,” said a banker. “But given the current situation, the funds generated are getting diverted to the banks and that’s casting a huge shadow on operations. It’s the reason why NMC has called for a debt standstill – it needs urgent access to the money it generates. Credit lines must be restored.”

The interim CEO, Michael Davis, is reportedly in touch with government agencies in Abu Dhabi and all of the lenders to work out a compromise solution. Because the last thing anyone wants to see happen is NMC being affected across its operations because of the fund squeeze.

“The 16,000 staff and 6.5 million patients a year who visit NMC’s UAE facilities need to be assured – it’s for the banks to do so,” said a company official. “It’s important for the UAE’s entire healthcare sector.

"The debts that NMC took on and the sukuk it issued got NMC and the UAE international exposure after it became part of the FTSE 100. The UAE investment environment could be marred if NMC is allowed to fail."