One of NMC Health Plc’s biggest creditors asked a court to put the troubled hospital operator into administration, prompting the company to counter that such an action would endanger the lives of people living in the United Arab Emirates as the coronavirus spreads.
Abu Dhabi Commercial Bank PJSC said Saturday it applied on April 2 to the UK’s High Court for administrators to take control of NMC Health and investigate alleged unauthorized activities.
NMC’s new executive chairman Faisal Belhoul had previously asked for patience from creditors, seeking a standstill on debt repayments to give the company time to prepare a recovery plan. In a later statement, he said he’s open to adding individuals to the board as recommended by Abu Dhabi Commercial Bank and other creditors, and accused the lender of disregarding the principles of the informal standstill accord.
“ADCB is putting its own interests above not only other creditors, but also the health and safety of UAE residents amid an escalating pandemic,” Belhoul said. Placing the company in administration would create “considerable downsides” on the community, country, the company and its creditors, he said.
The bank’s exposure to NMC, the UAE’s largest private healthcare provider, amounts to around $981 million and risks wiping out more than 80 percent of its estimated profit for this year. It’s also a lender to payments firm Finablr Plc, which is linked to NMC through its founder and cross-ownership. The bank is said to be working with Lazard Ltd. to try to recover some of the funds from the struggling companies.
Abu Dhabi-based NMC disclosed last month said that its non-executive directors had uncovered alleged theft and excess undisclosed borrowings by former directors. Trading in the shares has been suspended since Feb. 27, the board has sacked top executives and dismissed board members and banks that lent to the company are facing losses on the debt.
NMC’s known debt pile has more than tripled in recent weeks to $6.6 billion, up from the $2.1 billion reported at the end of June, after it successively uncovered borrowings that hadn’t been disclosed to the board.
The company found evidence of suspected fraud and debt that had been used for unknown purposes. Its chief financial officer and chairman have resigned.