NMC Health's survival 'relies on company securing $250m debt'

$250m financing is only accessible to companies that have filed for bankruptcy protection

Abu Dhabi, United Arab Emirates, May 25, 2020. The NMC Pharmacy along the Zayed The First Street, Abu Dhabi. Victor Besa / The National Section: Standalone / Stock

Embattled NMC Health’s prospects of survival could rely on the company raising about $250 million (Dh918.2m) in debt as it reportedly prepares for insolvency proceedings, an analyst says.

Vijay Valecha, chief investment officer of Century Financial, said the amount could come from debtor-in-possession financing, which is available to companies that have filed for bankruptcy protection in the US.

“It enables the firm to continue or sustain its operations while it navigates from the bankruptcy process,” Mr Valecha said.

NMC was seeking to raise up to $250m in debt and it has picked Perella Weinberg Partners to advise on the process, Reuters reported on Thursday.

The former London-listed NMC holding company was forced into administration in April amid claims of fraud, mismanagement and the discovery of undisclosed loans worth $4.1bn.

Administrators Alvarez and Marsal said last month they were trawling through hundreds of thousands of documents and preparing interviews with directors to try to find out what could be retrieved for creditors.

Mr Valecha said those lenders with a large exposure to the hospitals operator were likely to finance the debt.

“It would help sustain NMC’s business operations, which in turn would improve the banks’ chances of recovering part of its outstanding debt," he said.

“If NMC does succeed in securing debtor-in-possession financing, it lets vendors, suppliers, creditors and customers know that it will be able to remain in business, provide services, and make payments for goods and services during its reorganisation.

"If the lender has found that the company is worthy of credit after examining its finances, it stands to reason that the marketplace will come to the same conclusion."