NMC debts could be higher than $5 billion, advisers fear

NMC Health has identified it has an additional $2.7 billion of debt. (Reuters)
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Updated 12 March 2020

NMC debts could be higher than $5 billion, advisers fear

DUBAI: NMC Health, the troubled UAE-based hospitals group, is investigating at least $2.7 billion of new borrowings that have been uncovered by its new team of financial advisers and lawyers amid fears total debts could be considerably higher than $5 billion.

One adviser, who asked not to be named, said: “It’s really difficult to know the bottom of this at the moment. We are uncovering new items all the time.”

In a statement to the London Stock Exchange, where NMC shares were traded until they were suspended last month, the company said that the new borrowings — more than double its previously assumed level of debt — had not been “disclosed to or approved” by its board of directors.

It added that some of the cash “could have been utilized for non-group purposes,” but was still trying to “understand the exact nature and quantum” of the undisclosed facilities.

The revelation that NMC debts may be far higher than the previously disclosed $2 billion, and that there could still be other liabilities so far uncounted, is a major problem for the group as it seeks to continue operating while the UAE and other countries try to get to grips with the coronavirus.

FASTFACT

20,000

NMC employs 22,000 staff at 200 facilities in 19 countries.

NMC said that it had finally completed salary payments for last month to its 22,000 doctors and other medical staff at 200 facilities in 19 countries. Most of its business is in the UAE, where it accounts for about 30 percent of medical facilities. It also has a presence in Saudi Arabia via a joint venture signed last year as well as hospitals in Jeddah and Al Khobar.

“NMC is fully focused on safeguarding its operational liquidity to continue funding existing operations,” it added.

The business, founded by Indian entrepreneur BR Shetty in the 1970s, got into trouble last December when a report from US activist investor Muddy Waters alleged financial irregularities on a large scale.

NMC denied the allegations in the report, but the shares collapsed as further revelations emerged about over-valuation of assets, levels of debt and related party transactions.

In addition to Shetty, two UAE entrepreneurs — Khaleefa Butti Omair Al-Muhairi and Saeed Mohamed Butti Mohamed Khalfan Al-Qebaisi — controlled the company after it listed shares in London in 2012.

Advisers to Shetty said that he was in India on urgent family business, but was expected to return to the UAE when that was concluded.

The higher-than-expected level of debt will cloud attempts by the Abu Dhabi authorities to find a buyer for the business.


Oil prices rise as faith in supply cuts grows

Updated 26 May 2020

Oil prices rise as faith in supply cuts grows

  • Producers are following through on commitments to cut supplies as fuel demand picks up with coronavirus restrictions easing
  • OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices

NEW YORK: Oil prices rose on Tuesday, supported by growing confidence that producers are following through on commitments to cut supplies and as fuel demand picks up with coronavirus restrictions easing.
Brent crude futures were up 45 cents, or 1.3%, at $35.98 a barrel by 1:09 p.m. EDT (1709 GMT). US West Texas Intermediate (WTI) crude futures gained 89 cents, or 2.7%, to $34.14.
The Organization of the Petroleum Exporting Countries and other leading oil producers including Russia, a group known as OPEC+, agreed last month to cut their combined output by almost 10 million barrels per day in May-June to shore up prices and demand, which has been hit by the coronavirus pandemic.
Russian Energy Minister Alexander Novak is due to meet oil major producers on Tuesday to discuss the possible extension of the current level of cuts beyond June, sources familiar with the plans told Reuters.
The RIA news agency said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June.
On Monday, Russia’s energy ministry quoted Novak as saying that a rise in fuel demand should help to cut a global surplus of about 7 million to 12 million bpd by June or July.
OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down about 45% since the start of the year.
“The 16 million bpd oversupply in crude during April could be reversed altogether by June, helped by a 4 million-bpd recovery in crude demand and a 12 million-bpd cut in crude supply,” said Bjornar Tonhaugen, head of oil markets for Rystad Energy.
“OPEC+ is pulling the most weight by far, effectively reducing supply by nearly 9 million bpd while non-OPEC+ crude supply is down by more than 3.5 million bpd from March levels.”
In an indication of lower supply in the future, data from energy services business Baker Hughes showed that the US rig count hit a record low of 318 last week.