Lenders to Neopharma, the pharmaceuticals business founded by Bavaguthu Raghuram Shetty, are set to kick off talks to restructure 1 billion dirhams ($272 million) of debt, according to people with knowledge of the matter.
Abu Dhabi Commercial Bank PJSC, Abu Dhabi Islamic Bank PJSC, Dubai Islamic Bank PJSC, Emirates Islamic Bank PJSC, India’s Bank of Baroda and Bahrain’s First Energy Bank BSC will meet on Thursday to discuss a proposal to restructure the debt, the people said, asking not to be identified because the discussions are private. Creditors will also consider plans to bring in a new strategic investor to Neopharma to keep the business operating, the people said.
Abu Dhabi-based Neopharma, which is linked to NMC Health Plc through Shetty, has been pulled into the scandal surrounding the embattled hospital operator. A report by short seller Carson Block alleged that NMC had overpaid for assets, inflated cash balances and understated debt. NMC is being run by administrators Alvarez & Marsal Inc. after more than $4 billion of undisclosed borrowings were discovered.
Shetty established Neopharma in 2003 and was considering selling shares in the business last year before fraud allegations forced NMC into administration and pushed another of his companies, Finablr Plc, to the brink of collapse. The Indian entrepreneur had been considering selling Neopharma once his business empire started unraveling in a deal that would have valued the company at between $700 million and $1 billion, people with knowledge of the matter said in March.
A spokesman for Neopharma confirmed Thursday’s meeting, but declined to comment further. Representatives for Emirates Islamic Bank, DIB and First Energy Bank declined to comment. ADCB, ADIB and Bank of Baroda didn’t immediately respond to requests for comment.
Neopharma operates in about 50 countries in the Middle East, Africa and Asia, according to its website.