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

NMC Health has identified it has an additional $2.7 billion of debt. (Reuters)
Short Url
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.



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.

S&P 500 inches closer to record high

Updated 12 August 2020

S&P 500 inches closer to record high

  • US stock market index returns to levels last seen before the onset of coronavirus crisis

NEW YORK: The S&P 500 on Tuesday closed in on its February record high, returning to levels last seen before the onset of the coronavirus crisis that caused one of Wall Street’s most dramatic crashes in history.

The benchmark index was about half a percent below its peak hit on Feb. 19, when investors started dumping shares in anticipation of what proved to be the biggest slump in the US economy since the Great Depression.

Ultra-low interest rates, trillions of dollars in stimulus and, more recently, a better-than-feared second quarter earnings season have allowed all three of Wall Street’s main indexes to recover.

The tech-heavy Nasdaq has led the charge, boosted by “stay-at-home winners” Amazon.com Inc., Netflix Inc. and Apple Inc. The index was down about 0.4 percent.

The blue chip Dow surged 1.2 percent, coming within 5 percent of its February peak.

“You’ve got to admit that this is a market that wants to go up, despite tensions between US-China, despite news of the coronavirus not being particularly encouraging,” said Andrea Cicione, a strategist at TS Lombard.

“We’re facing an emergency from the health, economy and employment point of view — the outlook is a lot less rosy. There’s a disconnect between valuation and the actual outlook even though lower rates to some degree justify high valuation.”

Aiding sentiment, President Vladimir Putin claimed Russia had become the first country in the world to grant regulatory approval to a COVID-19 vaccine. But the approval’s speed has concerned some experts as the vaccine still must complete final trials.

Investors are now hoping Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans, as the battle with the virus outbreak was far from over with US cases surpassing 5 million last week.

Also in focus are Sino-US tensions ahead of high-stakes trade talks in the coming weekend.

“Certainly the rhetoric from Washington has been negative with regards to China ... there’s plenty of things to worry about, but markets are really focused more on the very easy fiscal and monetary policies at this point,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Financials, energy and industrial sectors, that have lagged the benchmark index this year, provided the biggest boost to the S&P 500 on Tuesday.

The S&P 500 was set to rise for the eighth straight session, its longest streak of gains since April 2019.

The S&P 500 was up 15.39 points, or 0.46 percent, at 3,375.86, about 18 points shy of its high of 3,393.52. The Dow Jones Industrial Average was up 341.41 points, or 1.23 percent, at 28,132.85, and the Nasdaq Composite was down 48.37 points, or 0.44 percent, at 10,919.99.

Royal Caribbean Group jumped 4.6 percent after it hinted at new safety measures aimed at getting sailing going again after months of cancellations. Peers Norwegian Cruise Line Holdings Ltd. and Carnival Corp. also rose.

US mall owner Simon Property Group Inc. gained 4.1 percent despite posting a disappointing second quarter profit, as its CEO expressed some hope over a recovery in retail as lockdown measures in some regions eased.

Advancing issues outnumbered decliners 3.44-to-1 on the NYSE and 1.44-to-1 on the Nasdaq.

The S&P index recorded 35 new 52-week highs and no new low, while the Nasdaq recorded 50 new highs and four new lows.