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Wed 26 Aug 2020 04:25 PM

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UAE's NMC Health faces advisory fees of $140m for bankruptcy

NMC will raise as much as $300m from creditors to fund the business during its administration

UAE's NMC Health faces advisory fees of $140m for bankruptcy

The restructuring of NMC Health through an Abu Dhabi court could cost as much as $140 million in consultancy and legal fees, almost half of what the hospital operator’s administrators are raising in new funding from creditors.

“It’s not cheap and we have the best advisers and the best minds in the world working on the preservation of this business,” acting chief executive officer Michael Davis said in a recent interview. “If you look at the amount of money that has gone to other parties or that the company has lost, this is money well spent.”

NMC’s court-appointed overseers are applying for bankruptcy proceedings through Abu Dhabi Global Markets, the financial centre of the UAE capital. They’re doing so as the company’s complex legal structure across different geographies makes it more efficient to oversee the process in one jurisdiction, where the bulk of its operations are based.

Founded by Indian entrepreneur Bavaguthu Raghuram Shetty, NMC had a peak market value of $10 billion on the London Stock Exchange before the uncovering of billions of dollars of undisclosed debt pushed it into administration.

Caretakers Alvarez & Marsal Inc. are now working on a turnaround plan that will see NMC focus on its UAE and Oman domestic markets, while selling non-core international assets.

NMC will raise as much as $300m from creditors to fund the business during its administration. Advisory fees to drive the bankruptcy process, which could take at least two years, will probably amount to between $100m and $140m, according to a recording of a conference call last week, and available on the company’s website. It was updating stakeholders on the company’s performance.

The estimated costs would cover more than ten advisory firms, including legal, tax and financial experts for both the company and its lenders on the restructuring and fund-raising side, a spokesman for Alvarez said. The fees would also include work related to investigations in anticipation of litigation.

Some of its other advisers include Perella Weinberg Partners, Kirkland & Ellis and Quinn Emanuel Urquhart & Sullivan.

“The business in the end is worth much much more than the amount of fees that we will pay,” the acting CEO Davis said. “Every single penny that has been spent has been worth it until this point.”

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