New NMC Healthcare chief calls for debt standstill
He vowed to recover misused funds and ensure those involved in any wrongdoing were prosecuted.
Leading hospital operator NMC Healthcare, struggling for a lifeline to come out from a $6.6 billion debt-trap, on Saturday renewed its plea for a "temporary standstill" from creditors to allow it time to prepare and activate recovery plan under its new executive chairman.
One week into his new role as head of the UAE's largest private healthcare provider, Faisal Belhoul, called for "patience and prudence" from his creditors.
"There are considerable downsides to the company and its creditors if we were to be placed into administration. This would cause instability to the operating businesses of the NMC Group, creating additional pressure on the group's liquidity and reducing value for all creditors. This would be damaging not only to the interests of creditors but, in the midst of the Covid-19 crisis, would potentially put lives at risk," Belhoul said in his first interaction with the media after taking over the reins of the embattled healthcare firm.
Last month, NMC made an attempt to obtain an informal debt standstill to stop banks demanding repayment of more than $2 billion, and asked lenders for continued support to achieve "an immediate stabilisation of the group's financing."
Setting out his commitments and priorities in his new role, Belhoul, a veteran investment professional, said he fully understood the duties owed to the company's creditors as the primary economic stakeholders in the NMC Group and vowed that he would do all in his power to cooperate with authorities in the UAE and the UK to recover misused funds and ensure those involved in any wrongdoing were prosecuted.
"I recognise the position in which the NMC Group finds itself in, and as executive chairman, I will be undertaking a review to strengthen governance and control structures and achieve operational stability for the NMC Group as quickly as possible," said Belhoul.
"We are working in full cooperation and in close dialogue with authorities in the UAE and the UK, including the UK's Financial Conduct Authority (FCA), and will vigorously chase down the perpetrators for return of these funds."
He said NMC remains committed to treating all creditors equally and not taking actions that prejudice the position of certain creditors relative to others.
"Departing from these principles by acceding to the demands of any individual creditor would jeopardise the operating businesses of the NMC Group, increasing the risk of customers and suppliers terminating contracts or re-negotiating terms and putting even more pressure on the group's liquidity," said Belhoul.
NMC Health's fortunes faced a dramatic reversal as it got embroiled in a series of financial scandals ever since Muddy Waters Research accused that the firm had inflated cash balances, overpaid for its assets and understated its debt. Its turmoil deepened amid disclosures of $6.6 billion debt, higher than the $5 billion revealed earlier in March and far higher than the $2.1 billion declared in its accounts.
Belhoul also underscored NMC's critical role in the provision of healthcare in the UAE, which makes the continuance of operations a national priority, particularly as the country and the world battle the Covid-19 pandemic. He said his immediate priority was to achieve operational and financial stability to provide frontline care in the battle against the pandemic, and to prioritise payments to its healthcare workers and critical suppliers.
"To bring independence and transparency to the finance and treasury functions, the board has also appointed PwC to advise on liquidity and operational matters and appointed Moelis as its independent financial advisor to determine the extent of, and assist in the restructuring of, the NMC Group's debt," Belhoul said.
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