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Thu 12 Mar 2020 01:45 PM

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Probe into UAE's NMC Health uncovers 'suspected fraudulent behaviour'

Troubled healthcare operator says it is 'fully committed' to investigating evidence discovered by independent review

Probe into UAE's NMC Health uncovers 'suspected fraudulent behaviour'

An independent review into the business of troubled UAE-based healthcare operator NMC Health has discovered "evidence leading to suspected fraudulent behaviour", it was announced on Thursday.

NMC said in a statement on the website of London Stock Exchange that it is "fully committed to investigating these activities" and has notified the relevant authorities in the UK and UAE to determine what action they consider to be appropriate.

NMC announced in January that the Independent Review Committee of the board of NMC had retained the law firm Glaser Weil which then engaged Louis Freeh, former Federal Judge and FBI Director and his firm Freeh Group International Solutions to look into allegations raised in recent reports by short seller Muddy Waters.

While these investigations are ongoing, NMC said it remains "fully focused on the provision of its healthcare services in all communities in which it operates".

Safeguarding its operational liquidity to continue funding existing operations throughout its various subsidiaries is also a priority, it added.

Moelis, PwC and Allen & Overy continue to support the company, including in its discussions with lenders and to assist in providing transparency with respect to its financial position.

The latest announcement comes two days after NMC Health said its debt levels have risen over the past six months and are currently estimated at $5 billion.

In addition to $2.1 billion group debt reported in June 2019, the company said it has identified over $2.7 billion in facilities that had previously not been disclosed to or approved by the board.

Shares of NMC, founded by Indian billionaire Bavaguthu Raghuram Shetty, have been in freefall since a Muddy Waters report which claimed that that the company had overpaid for assets, inflated cash balances, understated its debt and had corporate governance shortcomings.

The stock was suspended on February 27 and will be relegated to the mid-cap FTSE 250 Index when trading resumes.

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