16 Feb 2015 07:00
16 February 2015
NMC HEALTH PLC ANNOUNCES A NEW FINANCING FACILITY AND UPDATE TO GROUP STRATEGY
NMC Health plc (LSE:NMC) ('NMC' or the 'Company'), the leading integrated healthcare provider operating across the United Arab Emirates (UAE), today announces that it has obtained underwriting commitments for an US$825 million financing facility (the 'New Facility') from a number of international and regional banks through its subsidiary, NMC Healthcare LLC.
As a result of its strong track record and performance, the Group has been able to negotiate improved financing terms to support the execution of the Group's updated Growth Strategy.
Furthermore, the New Facility has been structured as two separate tranches to facilitate NMC's ongoing strategy of making phased acquisitions that will be accretive to the Company's underlying business and profitability. The overall quantum of the New Facility, combined with the Company's robust balance sheet is expected to ensure adequate available liquidity to capitalize on growth opportunities as they are identified.
Update to Healthcare Division Strategy
NMC has demonstrated significant growth on the back of its reputation for providing quality healthcare, attractive healthcare demand supply dynamics and a strong macro-economic environment. It is pleased to confirm that the company is nearing the end of its capital development programme announced at the time of its IPO on the London Stock Exchange in 2012 including:
· NMC Day Surgery Centre in the Mohammed Bin Zayed City Suburb of Abu Dhabi (opened in July 2013);
· 100 bed Brightpoint Royal Women's Hospital in Abu Dhabi (opened in July 2014);
· 60 bed Dubai Investment Park (DIP) General Hospital (opened in July 2014); and
· 250 bed hospital in the Khalifa City suburb of Abu Dhabi (expected to open in H1 2015)
Going into the next phase of growth in the Healthcare Division, the Group intends to expand both organically and via acquisitions to achieve the objectives of the updated Group Strategy, which include:
· Accelerate the establishment of Centres of Excellence in key specialties within its existing hospitals;
· Increase its participation in the rapidly growing medical tourism industry within the UAE by establishing its facilities as a destination of choice for medical tourists;
· Grow its medical specialty offering and clinic network within the UAE and maximising operational synergies in the region;
· Selectively establish a strategic presence outside the UAE via acquisitions of, or collaborations with, leading global medical institutions in order to further enhance and expand the technological know-how and medical expertise available across all of NMC's facilities; and
· Increase its footprint in Saudi Arabia and the broader Gulf Cooperation Council (GCC) region via organic initiatives and acquisitions.
Update to Distribution Division Strategy
Since its IPO, the Group has also continued to grow its Distribution business. The Distribution business currently has over 80,000 stock keeping units (SKUs) an increase from around 50,000 SKUs at the time of the IPO and has grown revenues by a CAGR of approximately 9% between 2011 and 2013.
NMC believes that the business is well-placed to grow both within the UAE and in the GCC region and to expand its product range beyond its traditional healthcare focus. NMC is also seeing a number of attractive organic and inorganic growth opportunities to accelerate growth in the Distribution division. The company is enhancing the division's management structure to ensure that it is optimised for the opportunities ahead.
Prasanth Manghat, Deputy Chief Executive Officer, commented:
"The New Facility is a testament to the appetite that exists amongst international and regional banks for strong regional success stories with sustainable long-term growth prospects like NMC. The new facility mirrors the Company's ongoing strategic initiatives of identifying value added and accretive acquisition opportunities that will position NMC as one of the largest, most advanced and qualitative healthcare service providers in the region and beyond, as well as enable it to continue establishing centres of excellence across the healthcare services spectrum."
Purpose of the New Facility
The New Facility will be structured in two tranches: 1) an Amortizing Term Loan Facility of US$350 million equivalent and 2) a Delayed Draw Acquisition Facility of US$475 million equivalent.
The proceeds from the New Facility will be used towards:
· Refinancing existing indebtedness of NMC and its subsidiaries (including the existing syndicated term loan facility);
· Providing acquisition funds to pursue its strategic objectives; and
· Other general corporate purposes.
The New Facility is expected to result in savings in interest and other costs of approximately US$ 2.75-3.75 million per annum at existing leverage levels.
Key terms of the Amortizing Term Loan Facility
· Amount: US$350 million
· Term: Five years
· Purpose:
o Repayment of existing indebtedness of NMC and its subsidiaries (including the existing syndicated term loan facility); and
o Other general corporate purposes
· Repayment: commencing after the first anniversary of the facility agreement signing date - to be repaid in variable monthly instalments over 48 months such that the Amortizing Term Loan Facility is fully repaid on the final maturity date (60 months)
· Currency: US$ and AED
· Interest Rate: Based upon the current leverage of the NMC group (the 'Group'), the initial margin is expected to be 100bps/70 bps over 1month LIBOR/EIBOR, although the pricing of the financing may fluctuate according to certain variables agreed in the underwriting documents
· Availability: 3 months from the facility agreement signing date
Key Terms of the Delayed Draw Acquisition Facility
· Amount: US$475 million
· Term: Five years
· Purpose: Acquisitions
· Repayment terms: Commencing on the earlier of (a) 12 months from the drawdown date or (b) the third anniversary of the facility agreement signing date (to be applied in tranches) - to be repaid in equal monthly instalments such that the Delayed Draw Acquisition Facility is fully repaid on the final maturity date (60 months)
· Currency: US$ and AED
· Interest rate: Calculated as a margin over 1 month LIBOR / EIBOR which may fluctuate according to certain variables agreed in the underwriting documents
· Availability: At any time during 2 years from the facility agreement signing date with a 1 year extension option
Enquiries:
NMC Health plc
Prasanth Manghat, Deputy Chief Executive Officer
+971 (0)50 522 5648
Suresh Krishnamoorthy, Chief Financial Officer
+971 (0)50 5915365
Roy Cherry, Head of Strategy & Investor Relations
+971 (0)50 667 0184
Media:
FTI Consulting, London
Matthew Cole
+44 (0)20 3727 1101
FTI Consulting, Gulf
Shane Dolan
+971 (0)4 437 2100
About NMC
NMC Health plc group is the leading private sector healthcare operator in the United Arab Emirates, with a nation-wide network of hospitals and operations in the country since 1975. The Healthcare Division currently operates or manages seven hospitals, two day-care patient centres, two medical centre and ten pharmacies. The company received almost 2.1m patients in 2013. The group also operates a significant UAE wide Distribution business supplying product lines across several key market segments, including: Pharmaceutical, FMCG, Food and Scientific and Medical Equipment. NMC Health plc group reported revenues of US$ 550.9m in 2013.
In April 2012 NMC Health plc was listed on the Premium Segment of the London Stock Exchange. At the time of its IPO, the group raised funds to enable it to pursue a further growth plan with a number of capital projects for new healthcare facilities in Abu Dhabi and Dubai. NMC Health plc is a constituent of the FTSE 250 Index.