£2billion black hole deepens crisis at NMC

NMC health’s debt mountain is £2bn bigger than previously thought, plunging it even deeper into crisis.

In another extraordinary announcement, the Londonlisted hospitals operator said borrowings were ‘materially above’ what had been disclosed and that some of the money may have been used improperly.

The firm, which runs hospitals in the Middle east, had claimed its net debt was £1.6bn at the end of June.

But it now believes the true figure is £3.7bn – the extra £2.1bn was from ‘facilities that had not been disclosed to, or approved ,by the board’.

‘NMC is continuing to work with its advisers to understand the exact nature and quantum of the undisclosed facilities,’ it added.

The development comes after its shares were suspended by the City watchdog on February 27.

Founder and joint chairman Br Shetty, an Indian billionaire, resigned this year amid confusion about how many shares he owned, with NMC already laid low by a shortseller research report that claimed its balance sheet could not be trusted.

It has hired former FBI boss Louis Freeh to investigate the claims against it, and is being probed by the Financial Conduct Authority.

NMC has appointed investment bank Moelis & Co and consultant PwC to advise it in talks with lenders.

It previously begged creditors for a temporary moratorium on its debts while it tries to stabilise the business.

NMC has been laid low since December when short seller Muddy Waters published an excoriating report, suggesting it had potentially engaged in fraud. The report concluded: ‘We do not believe its insiders or financials can be trusted.’

Among other concerns, Muddy Waters claimed Shetty had failed to reveal conflicts of interest at NMC. These included hospital construction and renovation projects where the contractor hired to do the work was wholly owned by him.

It claimed the costs of these projects also appeared to be artificially inflated.

Muddy Waters also said independent directors brought on to NMC’s board were ‘independent in name only’, with some having links to other Shetty businesses.

NMC initially rebuked the short seller and claimed its report was ‘false and misleading’. however, shares plunged by more than 60pc overall between when it was published and when the stock was suspended.

At the same time, Shares in Finablr – another Shetty company that owns currency seller Travelex – plunged 25.9pc yesterday.

The shares had been trading about 10pc lower before NMC’s announcement, but accelerated their losses afterwards.