NMC Health discovers further $1.2bn of undisclosed debt
Liabilities balloon at former FTSE 100 group with suspected fraud in its finance
NMC Health has discovered it has a further $1.2bn of undisclosed debt in the latest damaging revelation from the troubled healthcare provider, which earlier this month said it had found evidence of suspected fraud in its finances.
The Middle East-focused group said on Tuesday that its net debt had ballooned to $6.6bn after investigations uncovered more than $1bn of facilities that had not been flagged to the board, as well as about $50m of cheques used as guarantees.
The company’s last reported debt figure was $2.1bn, meaning that it has now discovered more than $4bn of loans that it had no knowledge of before a report by short-seller Muddy Waters in December raised questions about the extent of its financial position.
At the time, the company denied the allegations of financial impropriety, but it has since admitted that it has found evidence of suspected fraud.
The crisis at NMC has raised questions about how a former FTSE 100 company in apparent good health and supported by several blue-chip financial advisers could have such huge holes in its accounts.
The Financial Conduct Authority is investigating the company, which has had its shares suspended since the end of February. Last month Prasanth Manghat was fired as chief executive, while chief financial officer Prashanth Shenoy resigned on Tuesday.
This month, the group said that it had uncovered more than $2.7bn in debt facilities previously not disclosed or approved by the board, more than twice its reported net debt position.
On Tuesday NMC revealed a complex web of loans, facilities and cheque guarantees.
The company has bilateral and syndicated debt obligations comprising more than 75 debt facilities from over 80 financial institutions, it said, with work ongoing to verify outstanding debt obligations.
Its debt position is now estimated to be about $6.6bn, including a $360m convertible bond, a $400m sukuk — a bond structured to comply with sharia law — and billions of dollars of newly identified facilities.
Another $50m of cheques written by group companies and used as security for financing arrangements for others were also discovered.
NMC said it was continuing to work with its advisers — which include former FBI director Louis Freeh, who was appointed in January to investigate the allegations by Muddy Waters — to understand the nature and size of the undisclosed facilities, “including the circumstances in which they were obtained”.
The board said that it believed that some of the proceeds may have been used for purposes outside the company, and it is trying to trace the proceeds and see if it can recover any cash.