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And it's usually the scam BB's that stay open the longest - there is one still open from a fraud in 2014 - forgotten the name though!
Lol, sorry to disappoint you, but even delisted stocks are still open (see TCG)
They need to shut down this BB. Shouldn't be too long though when this gets delisted.
“shetty didnt get board approval”
He probably did (but just from the other 5 who have been sacked!)
I must say the did have an unusually large board for starters.
Also we were told “Upon settlement, the net proceeds from the Transactions will be used to repay in full the Borrowings raised by Nov Partners Investment Limited, entered into with, among others, Credit Suisse AG and Deutsche Bank, thereby releasing the pledge on NMC Shares under the Borrowings.”
So perhaps they did use this share sale to pay down the $335m facility once they’d been found out? Probably wishful thinking.
Hi ripley - I did
Adzy2k11
As I remember they mentioned supply chain financing in capital market day. So probably they didn't hide it but they haven't put any notes in the FS for shareholders.
Your point about IIs here may be right & that's why I think the company requested to suspend the trade to keep the confidence in investors and later they may clarify which may seems it's not that big problem for NMC as it sounds now. But obviously there is problems in Governance and that's why deserve the correction which has already taken place.
'Supply Chain'
I thought NMC had guarenteed the supplier debt as if it was NMCs ie if the supplier goes bust, nmc picks up the bill rather look for a new supplier...and shetty didnt get board approval to contract it
Hi Cast did you stay in this one ?
yes, very true - I don't believe them whatsoever, hence my constant negative stance... but it's good to always just question where and how I could be wrong. It would be totally shocking if they managed to totally fabricate everything given all the IIs invested... i just watched their capital markets day presentation again - sounds credible, so if this a total fraud then just wow.
I'm in trouble for a few months as was using borrowed money to invest in this. Hopefully I can keep my freelance role and get back to a good status in a few months where I can enjoy life once more. It will be great to free myself from the stock market for good.
Adzy, I think your analyses and insights are brilliant but you may be giving too much credence to the numbers and eplanations in the accounts. Just now most of that could be absolute fiction - cash is fact.
true - but atleast some of it would have been held as direct collateral and was sold (as we're told) for "enforcement of security"... so that $335m cannot be the full current balance that NMC is liable for, even if they go unpaid... it must be some measure lower than this (but true, probably not zero).
In terms of margin comparisons:
EBITDA margin comparison given with the competitors is again misleading and not comparable. As per our
Group strategy history (which was based on first Capacity, then Capability and later geographic expansion).
Unlike any other competitors, NMC has additional service capabilities which results in high margins
healthcare services. This is why NMC is differentiated from other competitors who are primarily
multispecialty focused businesses. NMC benefits in terms of margins from other specialized verticals like
IVF, long term care and O & M verticals which are high margin businesses.
FY 2014 EBITDA margins of our competitors i.e. Mediclinic and Al Noor hospitals were at 22% and 19%
respectively and NMC EBITDA Margin in FY 2014 stood at c. 16%. The NMC group started to add
capabilities from acquisitions starting from FY 2015 wherein high margin businesses like Long term care &
Homecare, IVF, Cosmetic business and Operations & Management contracts were added. This was
complemented with geographical expansions and utilization of the new facilities which were opened in FY
2014 and FY 2015 which helped group to sustain higher margins over the years.
I found this interesting too, they had kind of already told us they use supply chain and receivables financing...
Suppliers’ use of supply chain financing
The Group has never given an impression to investors or other stakeholders that our suppliers have not
used, or are not using, supply chain financing. These facilities remain commercial matters for these
suppliers and only have recourse to them. NMC has been publicly clear on that position for several years
and the Group accounts for its obligations to such suppliers as trade payables.
The Group is not assuming any recourse on any such supply finance facilities. NMC has simply provided
an undertaking in the form of a guarantee to settle the accepted trade payables against each invoice.
Accordingly, the supply chain finance programs that Muddy Waters claims could be “not on the balance
sheet at all” are accounted for as trade payables on the balance sheet, which is the correct classification
under IFRS.
Under these types of supply chain finance programs, suppliers accept discounted payments for their
invoices in return for receiving immediate payment from the financer, who then collects the full amount of
the invoice from the purchaser (NMC in this case) at the original invoice payment date. Clearly, for the
purchaser (NMC) these payments relate to trade payables, with no actual borrowing by NMC from the
financer to pay suppliers early or providing direct credit support for the suppl
Reading between the lines my guess is he was fired because he would have been the one who signed off on the supply chain finance. Probably some improper use of company funds too.
I think the UK staff and institutions have been used as a front of respectability by some crooks behind the company and will continue to be used until the current legal entity gets wound up. Some locals , who may or may not have made money from the float and subsequent shenanigans will buy the business for a song , having extracted a few £billion pounds from uk pensioners and institutions along the way. They will probably smile to one another and see it as payback for our Imperial past exploitations.
Can see a large part of this being sold off to balance the books so that the UAE side is kept as a going concern. There is still value left in the Company although this will reflect in a much lower price range.
Shetty and his two sidekicks seem to have raised a lot of cash from their shs. The question is what for - personal greed as they knew NMC was failing?, or more likely to prop up an indebted business? - it will come out in the wash, but this looks to be a massive fraud either way and should not have been allowed to take place in a supposedly regulated environment.
I hope there is some value for shareholders at the end of this.
ofcourse he will say he's not guilty - all CEOs which are fired do.
but can we really believe him? he was previously CFO and been working with Shetty for years, he must have known about this mess and if he didn't then that's even worse because as CEO he should have a handle on the business...
it's telling that the board gave no reason for the somewhat spontaneous dismissal... which just makes me think it's alot worse than we've been told.
'what have i missed?'
What if the $335m is a cost of service/expense and margins are not 40%, but 7% like say mediclinic?
adzy, thanks for pulling those figures together. You are correct....that should be more than enough to cover the debts. However, that's a rational chairman would operate to protect the company from the mess he's created. We have to assume that Shetty and the butty's are only interested in protecting their own wealth. I wouldn't put it past them that they fire sold their shares to line their own pockets whilst leaving NMC holding the can. I could be wrong and the banks did indeed sell to cover margin calls.
Crucially, the CEO will need to restructure debt and find new lines of short term debt. If they can do that and Executive, Board are now truly aligned in terms of objective then this company could continue as a going concern.
https://www.thenational.ae/business/markets/nmc-temporarily-suspends-share-trading-after-chief-executive-s-dismissal-1.985333
Not guilty he reckons!
Billionaires greed has brought this down. Too powerful to be regulated and questioned.
Good analysis there.
I think it's fair to assume a total restructuring of the capital structure will be required here. The sad news is that I think they can do it and keep the company running without bailing out the shareholders (last of their worries now).
That said, I can't help but think the $335m off-balance sheet financing is somehow linked to the share pledges. They say "the draw-down on the facilities as at 31 December 2019 was approximately $335 million and the current draw-down on the facilities is the subject of ongoing verification"... BUT in that early January sales, Al Qebaisi and Al Muhairi sold $493m worth (or 15% of the company) to "reduce outstanding indebtedness of themselves and other corporate entities owned by them under borrowings raised by Nov Partners Investment Limited".
Subsequent to that there have also been some sales by Mr Shetty - around $75m from what I can make out.
On top of this, on 7 Jan, we were told Al Qebaisi and Muhairi owned an additional c. 7% in NMC Health plc jointly through Infinite Investments LLC, which were subject to a 180 days lock-up. However, last night we were told that despite the lock up another 5 million shares which were in custody of First Abu Dhabi Bank and pledged to Commercial Bank of Dubai ("CBD"), had subsequently been sold by CBD as enforcement of security on 26 February 2020 and Infinite now only held 4.71% - down from 7% in January. (so raised around another $45 million)
so... in summary, they've raised ATLEAST $490m + $75m + $45m = $610m from NMC share sales... probably more we don't know about... this should be more than enough to cover the $335m drawdown as of 31 December 2019 and therefore shouldn't affect NMC's financials??
or am I being too optimistic? what have i missed?
If it escalates it might not for all we know
And not to mention the CEO and CFO who are qualified accountants and let this happen. Fundamentally overstating cash should be a criminal offence. In Saudi they have their hands chopped off for stealing.
Someone will take this for next to nothing and equity holders get zilch. That's my experience as cant see a reason why a buyer who was interested wouldn't have bought it by now. Means they're just waiting for nmc to run out of funds and get sold for next to nothing. Shetty and the rest stole from this company to fund their other acquisitions and screwed all the pis and as per usual theres no protection from the LSE or auditors or anybody else. You dont get any guarantees on the uk stock market casino.