The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
In December, the Financial Times reported that NMC had held talks to raise hundreds of millions of dollars of off-balance sheet debt to fund new hospitals. The company claimed the article was based on “false information”.
While NMC was not able to complete the €200m debt deal, draft documents seen by the FT show that Mr al-Qebaisi would also have been personally involved in the financing.
The Dubai companies register shows a special-purpose vehicle listed in these documents has its offices in the “Malek Saeed Butti Al Qubaisi Building”.
A spokesperson for Mr al-Qebaisi did not respond to a request for comment.
Dr Orkun Akseli, an associate professor at Durham Law School who has written extensively about receivables finance, said that this form of funding is “generally used by small businesses with little or no credit history” and sometimes from companies that are “having difficulty accessing other types of financing”.
“The company may have maxed out its existing line of credit,” Dr Akseli added. “If the bank says ‘I’m sorry I can’t lend to you any further’, the company may resort to credit card receivables.”
NMC said the company was “focused on providing additional clarity to the market as to its financial position”, but could not comment further because the group is in an offer period following potential takeover interest from GKSD Investment Holding.
Abu Dhabi Commercial Bank did not respond to a request for comment.
NMC filed the pledge on its credit card payments two days before two powerful Emirati shareholders sold off a 15 per cent stake in group, the first of a series of seemingly forced stock sales to satisfy margin calls.
The handful of City analysts who have been sceptical of NMC have questioned why the company was using onerous forms of financing given that it reported having £500m of cash on its balance sheet in June.
James Vane-Tempest, an analyst at Jefferies, on Monday slashed his price target on NMC’s stock in a research note called “Not Much Cash?” that flagged “concerns about accounting, cash flow, and governance”. Jefferies was the only investment bank with a “sell” recommendation on NMC’s stock prior to the Muddy Waters report.
Jefferies and Muddy Waters have both homed in on NMC’s use of supply-chain finance, a form of borrowing against supplier payments that accountants do not class as debt. Greensill Capital, a SoftBank-backed company that says it is “changing finance to change the world”, has arranged some of this funding for NMC.
The disarray at the company has been building in recent weeks. Earlier this month, the company’s founder BR Shetty and fellow shareholder Khalifa al-Muhairi quit the board after NMC admitted that a convoluted tangle of deals and share pledges between its largest investors left it unable to say who owns large chunks of its stock.
The filings on the credit card facilities also list one of NMC’s Emirati shareholders Saeed al-Qebaisi as a “grantor” in the deal. The company’s accounts have previously shown that the businessman personally guarantees some of NMC’s “short-term borrowings” — along with Mr Muhairi and Mr Shetty.
from the same FT journalists that first exposed the off-balance sheet financing, and then were bashed by NMC for it...
London-listed hospital operator’s finances are under intense scrutiny
NMC Health has recently resorted to pledging future credit card payments from customers to secure bank funding, deepening concern over the finances of the hospital operator engulfed by one of the biggest scandals to hit a FTSE 100 company in years.
Public filings in the United Arab Emirates show that NMC, which listed in London in 2012 and has been a member of the blue-chip index since 2017, began raising money this way from Abu Dhabi Commercial Bank at the start of the year.
The group’s main holding companies in Dubai and Abu Dhabi were required to pledge the “credit card receivables” at more than 20 of its hospitals, medical centres or pharmacies as collateral for funds, according to the filings.
The UAE filings show that NMC has not previously pledged its credit card receivables for funding, but has used other forms of receivables financing. Last week NMC pledged “the entire receivables” of its NMC Trading entities to Abu Dhabi Commercial Bank, along with their office equipment and machinery, the filings show.
NMC Trading handles the group’s sale of medicines to pharmacies and its website describes it as “the largest health and distribution company in the UAE”.
The revelation comes just a day after NMC fired its chief executive and warned that an independent investigation into its finances had unearthed arrangements used by its founder and another big shareholder that had not been approved by the board or disclosed to investors.
NMC ordered the investigation by former FBI director Louis Freeh after prominent short-seller Muddy Waters raised “serious doubts” in December about the group’s finances. Trading in NMC shares was suspended on Thursday, and the group has lost two-thirds of its market capitalisation since the Muddy Waters report.
Experts say that so-called credit card receivable financing is more commonly used by small businesses or those that are short of cash. It allows businesses to raise money against payments they are owed by customers. In this case, it could mean that Abu Dhabi Commercial Bank would be repaid from credit card payments tied tied to NMC’s private healthcare facilities.