NMC Health Requests Debt Standstill to Avert Repayment of $2 Billion

Published March 3rd, 2020 - 09:19 GMT
NMC Health Requests Debt Standstill to Avert Repayment of $2 Billion
NMC's debt has also lost value, with a spike in yields on $400 million in Sukuk issued by NMC in 2018 and due in 2023 last week to almost 25 percent from a yield of around four percent before the Muddy Waters report. (Shutterstock)
Highlights
Lenders to the FTSE 100 hospital operator could call in debts within five days after disclosures by three of NMC's major shareholders.

Hospital operator NMC Health, which is making a last-ditch attempt to obtain an informal debt standstill to stop banks demanding repayment of more than $2 billion at the end of this week, confirmed on Monday the appointment of Moelis and Company to "support and advise" it on negotiations with lenders.

The company said in a statement it was asking lenders for continued support and an informal standstill in relation to existing facilities to achieve "an immediate stabilisation of the group's financing."

Lenders to the FTSE 100 hospital operator could call in debts within five days after disclosures by three of NMC's major shareholders - including founder BR Shetty, former vice-chairman Khaleefa Butti Omair Yousif Ahmed Al Muhairi and Saeed Mohamed Butti Mohamed Khalfan Al Qebaisi - showed that together they hold less than 30 percent of its shares, potentially triggering a "change of control" clause in loan agreements.

The embattled company, a regional leader in the healthcare sector, also had hired PwC as an operational adviser to assist on liquidity management and operational measures, while Allen & Overy has been hired as a legal adviser.

Moelis, a global investment bank that provides financial advisory services to corporations and governments, will support and advise on NMC's discussions with its lenders, while PwC will assist on liquidity management and operational measures," NMC said.

The company said it is currently focused on "safeguarding operational liquidity."

The informal standstill includes a request to lenders not to exercise any rights and remedies that may arise from any current or future defaults under NMC's finance documentation.

One report said that Moelis is expected to meet lenders this week to discuss debt standstill option. NMC last week removed Chief Executive Prasanth Manghat with immediate effect and granted its finance chief extended sick leave.

In 2018, NMC raised a $2 billion loan from a consortium of banks including Citi, JPMorgan and Standard Chartered. That loan included the refinancing of an existing facility of more than $1 billion and a bridge loan.

NMC shares had lost more than 70 percent since the Muddy Waters report on December 17, and is the worst performer this year in the UK's benchmark FTSE 100 Index.

NMC's debt has also lost value, with a spike in yields on $400 million in Sukuk issued by NMC in 2018 and due in 2023 last week to almost 25 percent from a yield of around four percent before the Muddy Waters report.


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