Alvarez & Marsal, the firm appointed to oversee the future of NMC assets following its collapse with a total of $6.6 billion of debts, told creditors in a recent presentation that the Saudi business and some other international operations were regarded as “non-core,” and that it was examining options to sell.
The Saudi operation was formally launched last year in a joint venture with the Kingdom’s General Organization for Social Insurance that involved a swap of assets and cash. The venture is currently held via the Tadawul-listed company CARE.
The administrators told creditors that they were looking to exit the joint venture to raise cash as part of the restructuring of NMC.
The presentation said: “The recommendation is to explore the potential of engaging with GOSI (the General Organization for Social Insurance) for the purchase of the company’s interest and/or a capital markets solution, such as reversing the Saudi joint venture into CARE.
“However, any decision would have to be considered in light of the potential underlying value of the business, especially as NMC is not a forced seller of the business,” it added.
A spokesman for NMC confirmed that it was looking to exit the Saudi joint venture, but said that discussions with potential buyers had not begun.
Among NMC assets is a 53 percent stake in Saudi Medical Care Group, which in turn owns 49 percent of CARE, giving NMC an effective interest of 26 percent in the Tadawul-listed company.
NMC’s Saudi ventures so far have avoided any taint from the damaging revelations about NMC, which is facing regulatory and legal actions in several jurisdictions as investigators seek to piece together what happened to more than $4 billion of unauthorized bank lending that forced the downfall of the once multibillion-dollar company.
Marija Simovic, Alvarez managing director, said last week that the firm had uncovered “most” of the hidden debts that led to its collapse.
“Do we believe a majority of it has been identified? Yes. Is it 100 percent? No,” she told Bloomberg.
Teams of investigators from the UK, where NMC was listed on the London Stock Exchange, as well as in the UAE and other jurisdictions, are investigating financial records of NMC to trace the missing funds.
As part of the creditors’ presentation, Alvarez gave a verbal update on the forensic investigations into illegal bank borrowings, which has not been made public.
Analysts at investment bank Arqaam Capital said the decision by NMC to exit the joint venture could lead to takeover interest in CARE, listed on the Tadawul with a market capitalization of SR2.3 billion ($613.3 million), and named Saudi health groups Al-Hammad Medical and Mouwasat Medical Services as potential buyers.
CARE has a resilient balance sheet, with ample cash and low borrowings, and a “healthy growth profile,” Arqaam said.
NMC, the UAE’s leading health care provider, was founded in the 1970s by Indian entrepreneur BR Shetty and run before its collapse by CEO Prasanth Manghat.