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Fri 24 Apr 2020 10:20 AM

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Sculptor, Farallon among hedge funds readying for NMC debt talks

NMC started unravelling in December, when short seller Muddy Waters Capital alleged it overpaid for assets and understated debt

Sculptor, Farallon among hedge funds readying for NMC debt talks

NMC’s fall from a $10 billion company would have been the cue for the likes of distressed investors like Sculptor and Farallon.

Sculptor Capital Management Inc. and Farallon Capital Management LLC are among top distressed debt investors preparing for restructuring talks involving NMC Health Plc, the hospital operator whose collapse has entangled global and regional banks.

Redwood Capital Management LLC and Silver Point Capital LP are also among bondholders, according to people with knowledge of the matter. Distressed investors typically buy the debt of troubled companies at a discount, with the aim of making a return from its turnaround.

NMC started unravelling in December, when short seller Muddy Waters Capital LLC alleged it overpaid for assets and understated debt. The company has since had its shares suspended on the London Stock Exchange, fired its chief executive officer, sought a debt standstill, and uncovered evidence of fraud. Its demise has roped in lenders including Barclays Plc, Standard Chartered Plc and the biggest banks in the United Arab Emirates.

Investors in the company’s convertible bonds and sukuk have formed a committee to negotiate with the administrators of NMC and are being advised by law firm Weil Gotshal & Manges LLP, the people said, asking not to be identified because the information is private. Bank lenders have already formed a coordinating committee to restructure NMC’s $6.6 billion of debt.

NMC’s fall from a $10 billion company would have been the cue for the likes of distressed investors like Sculptor - the former Och-Ziff hedge fund business with $35 billion in assets - and Farallon, the $29 billion investor founded by billionaire Tom Steyer, who in March pulled out of the Democratic presidential race. Silver Point has a $1.5 billion private-equity distressed fund started in 2019 and another $854 million fund launched in 2016.

PJT Partners Inc. and Dubai-based deNovo Corporate Advisors are jointly acting as financial advisers to the debt group, the people said. Some investors aren’t lobbying for formal representation on the committee due to their small exposure, according to the people.

Representatives for Farallon, Sculptor, Silver Point, deNovo and PJT declined to comment. Redwood Chief Executive Officer Ruben Kliksberg, who replaced junk bond veteran Jonathan Kolatch after he retired last year, didn’t immediately respond to an email seeking comment. Weil didn’t return a call and an email seeking comment.

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