DUBAI: NMC Health, the UAE-based hospitals group, admitted it has not yet paid thousands of employees for February amid a worsening financial crisis at the troubled company.
In a letter from the acting chief executive seen by Arab News, NMC told staff that it was working toward a solution and “hoped” one could be found soon.
Michael Davis, who became acting CEO last week as serious questions were raised about the financial conduct of the previous executive team, told employees: “The past week has been one of the most difficult in recent NMC history. For the first time in several years, NMC was unable to pay your salaries on the 25th of the month.”
NMC, whose shares are quoted on the London Stock Exchange (LSE), is the largest health care provider in the Emirates, where most of its 2,000 doctors and 20,000 nursing and ancillary staff are based. But it has operations in 18 other countries around the world, including a venture in Saudi Arabia.
Under UAE law, salary payments are due on the first day of the month, but firms are allowed 15 days to complete payroll procedures before they are judged to
be delinquent.
“I fully understand that this does not meet the requirements of many of you who have obligations to your families back home and to banks here locally. I am extremely embarrassed and truly sorry for having let you down,” Davis said.
“The well-being of you, your families and our patients is our utmost concern and my promise to you is that we will be open and honest with our communications moving forward,” he added.
The urgency to find cash for salaries adds to the pressure on NMC, which has asked its bankers for a standstill in debt repayment while it tries to renegotiate
around $2 billion of liabilities.
Coming in the middle of the global coronavirus outbreak, the need to keep medical facilities fully open and functioning is urgent.
The UAE authorities are known to be concerned with the NMC situation, and are believed to be considering financial intervention to help the company keep going. Creditor banks are also being encouraged to be understanding in their discussions of new
repayment terms.
NMC’s current financial problems began in December when a report from US activist investor Muddy Waters highlighted problems at the company.
Its shares lost 70 per cent in value before they were suspended on the LSE, wiping billions of dollars of value off the company and its shareholders.
In a related development, the LSE said it would be removing NMC from the FTSE 100 list of leading companies when trading in the shares eventually resumes because it had fallen below the minimum value required.
NMC was regarded as one of the great success stories from the UAE, having been founded in 1973 by entrepreneur BR Shetty, who is believed to have recently traveled on urgent family business to his family home in India.
Its problems were compounded when Shetty and two Emirati backers — Khaleefa Butti Omair Al-Muhairi and Saeed Mohammed Butti Mohamed Khalfan Al-Qebaisi — were found to have pledged shares against bank loans.
