A&M working on NMC Health's administration and turnaround

26 August 2020 Consultancy-me.com

Already the administrator for NMC Health’s holding company in London, Alvarez & Marsal has now been appointed to manage NMC Health’s administration in Abu Dhabi. The firm embarks on a three-year recovery project that includes a debt moratorium, restructuring and asset offloading. 

The largest private health firm in the UAE; NMC Health’s operation spans more than 200 practices, which includes hospitals, clinics and pharmacies. The firm is also the first Abu Dhabi business listed on the London Stock Exchange, having raised nearly $190 million in its 2012 Initial Public Offering (IPO), then valuing its company at $8 billion.

However, things took a downward turn at the end of last year, when US-based Muddy Waters Research accused the firm of fraudulent reporting. NMC’s debt of more than $6 billion was listed as just over $2 billion on its balance sheet, while cash had also been drained from the company’s reserves.

The result was a nearly 50% drop in NMC’s share value, amounting to a loss of $1.5 billion. This was compounded by a tight squeeze on revenues since the spread of the Covid-19 crisis. In April, the UAE Central Bank seized all personal and family assets from NMC founder Bavaguthu Ram Shetty, while Alvarez & Marsal was brought on board to manage insolvency proceedings for NMC Health in the UK.

A&M working on NMC Health's administration and turnaround

Marija Simovic, managing director at Alvarez & Marsal and one of the restructuring specialists involved in the case has indicated that the firm is working actively to identify and recover most of NMC’s hidden debt. So far, she says that most of it has been identified, but there is still work to be done. “We have got a lot of material and in the near future we hope to launch some actions,” she said.

Meanwhile, NMC in Abu Dhabi has also made the decision to file for administration with Abu Dhabi Global Markets (ADGM). With all its restructuring experience in the region, Alvarez & Marsal has been appointed to manage the administration proceedings here as well. “We are looking to move there as soon as we can,” said Simovic to Reuters.

Similar to a Chapter 11 filing in the US, the ADGM filing gives NMC the time and room to restructure its operations. The deadline to come up with a binding restructuring plan has been set for the end of January next year, and NMC has agreed a $300 million sum with existing lenders to fund the restructuring process.

Together with management at NMC, Alvarez & Marsal are developing a three-year turnaround strategy, which involves consolidating NMCs highest value assets and operations – specifically the healthcare markets across UAE and Oman. Meanwhile, the trading arm of the firm will reportedly be either sold off or shut down.

“We made the decision that trading was not core and we wanted to divest it to get some value off it. We wanted to focus really on healthcare and not the trading side,” said acting CEO at NMC Michael Davis, speaking to The National.

Other non-core assets to be offloaded include a joint venture in Saudi Arabia, UK-based Aspen Healthcare, and an IVF practice in the Spain and Latin America geographies, which cumulatively account for roughly a quarter of NMCs revenues. Aspen and the IVF company have reportedly seen interest from prospective buyers already.

Also on Alvarez & Marsal’s agenda is the management of several claims launched against NMC by creditors across the world, including Europe and the US. Simovic said to The National that these claims are being handled on a case-by-case basis.