NMC pins turnaround hopes on likely $250m debt facility
DEAL WOULD MEAN UAE BANKS ARE TAKING LONGER-TERM VIEW ON EXPOSURE
Abu Dhabi-headquartered NMC Health is all set to sign off on a $250 million debt funding, which that it desperately needs from UAE banks, according to financial industry sources.
The terms of the deal have been agreed, and the funds would come in handy for the hospital operator to meet its medium-term cash flow requirements, including salary payoffs. But some banking sources say the amount could still be higher.
‘Lenders convinced’
If the loan programme is confirmed, it would mean that UAE banks are willing to take a longer term view on their exposures to the cash-strapped NMC, which had run up exposures of $6 billion-plus with more than 80 institutions, a lot of which was kept off the books until recently.
(Another UAE based company, the engineering firm Drake & Scull International, also recently confirmed that it had been making significant progress on its financial restructuring with lender banks)
“NMC’s CEO Michael Davis and Alvarez & Marsal, the NMC administrator, have convinced lenders that the additional $250 million will be critical to survival,” said a banker. “The underlying NMC business is strong — it showed the ability to weather the Covid-19 crisis as well as the devastating fraud that was uncovered just before the pandemic struck.”
It is not confirmed whether it is just one bank that is doing the lending or whether others are involved as well.
Strings attached
Only companies that have filed for bankruptcy protection are allowed to access DIP (debtor-in-possession) financing, and these can tapped for reorganisation purposes. “NMC’s $250 million financing is contingent on ADGM (Abu Dhabi Global Market) accepting the company’s filing under its jurisdiction,” said Vijay Valecha, Chief Investment Officer at Century Financial.
Sources at NMC Health, meanwhile, confirm that “timely” salary payouts are now firmly back on track. In February,
The underlying NMC business is strong — it showed the ability to weather the Covid-19 crisis as well as the devastating fraud that was uncovered just before the pandemic struck.
A banker with knowledge of NMC’s situation
just as the extent of its financial obligations were coming to light, NMC ended up delaying salaries by more than two weeks — the first time it had happened in the company’s history.
“A significant amount of work over the past five months and through close cooperation with local banks and insurance companies, NMC completed the July payroll on time and prior to the start of Eid Al Adha holidays,” the official said.
“Everyone right now is fully focused on sustaining the business and the well-being of patients and staff. So much work has been put in since April, when NMC Health was placed under administration, and the administrators and management are finally seeing some light at the end of this tunnel.”