Kuwait International Bank to sell its total exposure to NMC Health

By Ashika Rajan, Trainee Reporter
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Kuwait International Bank (KIB) is recouping some of the money NMC Health owes it by selling off the healthcare group’s debt. 

The lender has an exposure of $74.11 million with NMC Health, but has agreed to sell the debt for $13.25 million, the company said in a statement to Boursa Kuwait, where its shares trade. It did not name the buyer and stated that the debt exposure was “fully provided” in last year’s accounts.

KIB stated that “the sale will be disclosed once executed and all relevant procedures are completed.”

NMC Health’s problems began after a report by short-seller Muddy Waters in 2019 accused the firm of exaggerating its assets and understating its debt, even though it developed from a single clinic to become the UAE’s largest healthcare provider.

An independent inquiry following that uncovered over $4.4 billion in previously unreported debt, and the firm was placed into administration in April of last year.

Mr. Alvarez and Mr. Marsal, the company’s administrators, stated in an April update to lenders that it had received around $6.4 billion in creditor claims to date, including $6.3 billion from a group of 136 financial creditors.

A further $650 million in debt owed to another ten major financial creditors remained outstanding and needed to be filed by the end of April.

On June 15, creditors will vote on NMC Health’s future. The administrators propose a lender-led restructuring of the company, which would reduce its debt to $2.25 billion in exchange for exit instruments that could be cashed in whenever the company resumes growth and generates more value.

The proposal needs the support of more than half of the unsecured creditors. If this is not achieved, a distressed sale or liquidation will be carried out. Administrators noted that a distressed sale “is likely to yield a significantly lower recovery than a restructuring”, whereas liquidation of the business would result in “little or no recovery” for the majority of the company’s creditors.

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