www.nmc.ae
CARE.COMMUNITY.COMPASSION.
NMC Healthcare LTD(in Administration)All Lender Update October 7, 2020
DRAFT
• This presentation is comprised of information that has been prepared by the NMC Healthcare LTD (in Administration) and certain of its subsidiaries (the Group) for information purposes only and contains only a high level and illustrative summary of the position of the Group as at August 31, 2020. This presentation does not constitute a financial product, investment, tax, accounting or legal advice (and should not be used as the basis for giving definitive advice), a recommendation to invest in the securities or purchase debt of the Group or any other person, or an invitation or an inducement to engage in investment activity with any person. This presentation has been prepared without taking into account the objectives, financial situation or needs of any particular recipient of this presentation, and consequently, the information contained in this presentation may not be sufficient or appropriate for the purpose for which a recipient might use it. Any such recipients should conduct their own due diligence, consider the appropriateness of the information in this presentation having regard to their own objectives, financial situation and needs, and seek financial, legal, accounting and tax advice appropriate to their particular circumstances.
• Richard Fleming and Ben Cairns of Alvarez & Marsal Europe LLP (“A&M”) were appointed as Joint Administrators of NMC Healthcare LTD on September 27, 2020 by the Abu Dhabi Global Markets court. The Joint Administrators act as agent for the Group without personal liability. The appointment of the Joint Administrators are personal to them and, to the fullest extent permitted by law, Alvarez & Marsal Europe LLP does not assume any responsibility and will not accept any liability to any person in respect of this update or the conduct of the Administration.
• No representation, warranty or undertaking (whether express or implied) is made by the Group, the Administrators or A&M as to the completeness, accuracy or fairness of the information contained in this presentation or whether this presentation is suitable for any recipient's purposes. In particular, but without limiting the general statements in this disclaimer, the financial information of the Group and its financial position in this presentation has been prepared based on preliminary investigations as at August 31, 2020 only and is subject to change. Such financial information may be updated from time to time and the numbers/amounts in this presentation have not been finalized, verified, audited or reviewed. This presentation contains a brief high-level overview of solely the matters to which it relates and does not purport to provide an exhaustive summary of all relevant issues.
• This presentation may include statements, estimates, opinions and projections with respect to anticipated future performance of the Group (forward-looking statements) which reflect various assumptions concerning anticipated results taken from the Group’s current business plan or from public sources which have not been independently verified or assessed by the Group and which may or may not prove to be correct. Such forward-looking statements reflect current expectations based on the current business plan and various other assumptions and involve significant risks and uncertainties and should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Such forward-looking statements only speak as at the date of this presentation. It is up to the recipient of this presentation to make its own assessment of the validity of such forward-looking statements and assumptions and no liability is accepted by any member of the Group, the Administrators, A&M or any of their respective directors, officers, employees, agents, partners, affiliates, managers and professional advisers (together, the Group Parties) or any other person in respect of the achievement of such forward-looking statements and assumptions.
• The delivery of this presentation does not imply that the information herein is correct as at any time subsequent to the date hereof and, as set out above, remains subject to further finalization, verification and review. Other than in accordance with its regulatory disclosure obligations, the Group has no obligation whatsoever to update or revise any of the information, forward-looking statements or the conclusions contained herein or to reflect new events or circumstances or to correct any inaccuracies which may become apparent subsequent to the date hereof. This presentation has not been reviewed or approved by any rating agency, trading exchange or any other person.
• This presentation will be made available via the Group’s website to all note holders simultaneously on the date of issuance.
• To the fullest extent permitted by law, the Group, the Administrators and A&M will have no tortious, contractual or any other liability to any person (including any Third Party) in connection with the use of this presentation. The Group accepts no liability whatsoever to any person, regardless of the form of action, including for any lost profits or lost opportunity, or for any indirect, special, consequential, incidental or punitive damages arising from any use of this presentation, its contents or preparation or otherwise in connection with it, even if any Group entity or and the Advisor has been advised of the possibility of such damages.
2
Non-Disclosure / Non-Reliance
DRAFT
Table of Contents
3
1 Trading Update 4
2 Restructuring To-Date Highlights 8
3 Actions to Complete Restructuring 12Administration 15
Claims Adjudication 20
Investigation 24
Operations 31
Trading 35
Finance & Liquidity 37
Financial Restructuring 42
Non-core Sales 51
4 Close 53
DRAFT
Impact from COVID resulted in higher occupancy but lower revenues due to lower re-imbursement rates compared to standard procedures. Recovery was faster than expected, with revenue performance exceeding business plan and prior year (in August); however, a second peak remains a risk
Source: NMC data, A&M analysisNote: Actuals and budget based on best estimate from multiple NMC report sourcesFigures shown for NMC Healthcare LTD excluding Trading, India, Kenya, Central and O&M costs
Impact of COVID on Revenue
Covid-19 impact on current Group trading (Gross rev. % Var)
(50%)
(40%)
(30%)
(20%)
(10%)
0%
10%
20%
Mar-20 Aug 20Jan-20 Feb-20 Apr-20 May-20 Jun-20 Jul-20
Gross revenue Variance (% MoM)
Var vs. PYVar vs. BP
UAE Last Twelve Months inpatient bed occupancy rate (%)
57%
69%65%
63%
57% 56%
83%80% 79%
82% 82%
92% 93% 95% 94%
87%
50%
60%
70%
80%
90%
100%
Aug-19
65%
Oct-19
Sep-19
82%
71%
Nov-19
Dec-19
Jan-20
66%
Feb-20
83%
Mar-20
Apr-20
77%
May-20
61%
Jun-20
53%
85%
Jul-20
53%Aug-20
UAE Hospitals Provita
2019 2020
Commentary
• While revenues were negatively impacted due to COVID, they bounced back post-lockdown and once hospitals were declared ‘COVID-free’• Occupancy rates for hospitals and Provita increased during COVID, both taking significant additional patients• The decline in revenue during the COVID-heavy months is a result of lower re-imbursement per patient rather than less patients. The strong revenue
recovery post COVID, is being driven by Outpatient activity, IVF and Cosmetics.
Covid-19 Impact
4
DRAFT
Given a faster than anticipated recovery, actuals are ahead of business plan with a ~7% increase in top-line and tight cost control resulting in a significantly higher EBITDA than business plan
Source: NMC data, A&M analysis
Aug YTD Performance vs. Business Plan vs. Previous Year
Aug YTD detailed performance vs. business plan vs. previous year
Note: • Figures shown for NMC Healthcare LTD excluding Trading, Kenya and India• Figures are pre-IFRS-16 consistent with the Business Plan
2020A Business Plan 2019A
USD m Aug YTD Aug YTD Var Var (%) Aug YTD Var Var (%)Gross revenue 955.7 889.9 65.8 7.4% 1,055.9 (100.2) -9.5%
Denials / rejections & discounts (40.1) (30.6) (9.5) -31.0% (36.3) (3.8) -10.5%
Net revenue 915.6 859.3 56.3 6.6% 1,019.6 (104.0) -10.2%
Direct labour (344.0) (349.2) 5.2 1.5% (347.3) 3.3 0.9%
Clinical expenses (135.8) (129.0) (6.8) -5.3% (145.7) 9.9 6.8%
COGS (73.7) (78.8) 5.1 6.5% (90.4) 16.7 18.5%
Other direct costs (20.8) (18.9) (1.9) -9.9% (27.4) 6.6 24.1%
Indirect labour (133.7) (134.8) 1.1 0.8% (146.9) 13.2 9.0%
Other indirect expenses (92.2) (100.2) 8.0 7.9% (115.9) 23.7 20.4%
EBITDAR 115.4 48.4 67.0 138.4% 146.0 (30.6) -21.0%
Rent (64.3) (58.8) (5.5) -9.3% (69.0) 4.7 6.9%
EBITDA (Before one-offs and restructuring costs) 51.1 (10.4) 61.5 n.m. 77.0 (25.9) -33.6%
5
DRAFT
6
Performance Improvement
Source: A&M analysis1 - Figures not drawn to scale2 – Achieved improvements excluding other indirect expenses – validation in progress3 – Rent benefit under validation due to ongoing lease negotiations
On track At risk Delayed
Workstream Status Accomplished to date
Benefit achieved to date(USDm, YTD20)
Central cost reduction1
Site headcount reduction
Site closures and sell-offs
Site procurement reduction
• Accelerated FY20 labor reduction with 97 FTEs reduced since March
• Cost control (maintenance, other indirect spend)• Incorrect adjustment for IFRS16 in the budgeting
process
• COVID-related initiatives (e.g. salary cuts, furloughs) enabled containment of labor cost; expected to meet FY20 target
• Closed CS Jumeirah and CS Oman, settlements underway
• Oman cluster sale process ongoing• Brightpoint options under review
• Achieved savings across pharmacy and drug operations, medical consumables, medical equipment, and indirect procurement
Rent optimization2
• Developed master tracker for all active and recently terminated leases
• Partially validated rent reduction and lease termination savings
Site extension
1
2
3
4
5
Preliminary figures – Validation ongoing
• Extensions (Al Nahda and DIP Blue) are delayed due lack of available liquidity
• Payment of existing liabilities is required to get back on track
Target FY20 0.0
0.5Achieved YTD20
Target FY20 0.0
Under validationAchieved YTD20
-0.3
0.0Achieved YTD20
4.3Target FY20
13.4Achieved YTD20
4.4Target FY20
3.3Achieved YTD20
3.1Target FY20
3.5Achieved YTD20
Target FY206
Total11.6Target FY20
20.7Achieved YTD20
On track At risk Delayed
Workstream Status Accomplished to date
Benefit achieved to date(USDm, YTD20)
Central cost reduction1
Site headcount reduction
Site closures and sell-offs
Site procurement reduction
• Accelerated FY20 labor reduction with 97 FTEs reduced since March
• Cost control (maintenance, other indirect spend)• Incorrect adjustment for IFRS16 in the budgeting
process
• COVID-related initiatives (e.g. salary cuts, furloughs) enabled containment of labor cost; expected to meet FY20 target
• Closed CS Jumeirah and CS Oman, settlements underway
• Achieved savings across pharmacy and drug operations, medical consumables, medical equipment, and indirect procurement
Rent optimization2
• Developed master tracker for all active and recently terminated leases
• Partially validated rent reduction and lease termination savings
Site extension
1
2
3
4
5
Preliminary figures – Validation ongoing
• Extensions (Al Nahda and DIP Blue) were delayed due lack of available liquidity
• Payment of existing liabilities is required to get back on track
Target FY20 0.0
0.5Achieved YTD20
Target FY20 0.0
Achieved YTD20 Under validation
-0.3
0.0Achieved YTD20
4.3Target FY20
13.4Achieved YTD20
4.4Target FY20
3.3Achieved YTD20
3.1Target FY20
3.5Achieved YTD20
Target FY206
Total11.6Target FY20
20.7Achieved YTD20
DRAFT
Table of Contents
7
1 Trading Update 4
2 Restructuring To-Date Highlights 8
3 Actions to Complete Restructuring 12Administration 15
Claims Adjudication 20
Investigation 24
Operations 31
Trading 35
Finance & Liquidity 37
Financial Restructuring 42
Non-core Sales 51
4 Close 53
DRAFT
8
Since April 2020, the Company has completed Stabilization and Preparation Stages, and now, in ADGM Administration, is on track to execute a restructuring plan, with the objective to exit ADGM in H1 2021
Restructuring Process Overview
PHASE 3The Restructuring Plan or Sale of Core
PHASE 2 Preparations for ADGM Administration
Ongoing and Improved Communication to Key Stakeholders
PHASE 1Stabilisation & Common Information
Platform
1
2
3
Key Deliverables: Business plan, Investigations, Court process, restructuring
options, recovery analysis
Key Deliverables: Appointment of Administrators, AFF1, non-core disposals
Phase 3 Key Activities and Deliverables:• Administration Funding Facility (“AFF”) syndication• Claim adjudication, debt mapping and entity priority
model
• Deliver investigation report
• Prepare and negotiate plan of reorganisation term sheet
• Run core asset sale process
• Exit through plan of reorganisation or sale of core
• Completing non-core disposals, including Trading• Preparation launch to litigate against wrongdoers
• Implementation of performance initiatives
• Reconstruction of the finance function and reporting processes
Note: Administration Funding Facility relates to $325m of new money
DRAFT
9
Significant progress has been made to restructure the Company, with the recent appointment of Administrators in ADGM providing the platform and stability to complete its financial and operational restructuring
Restructuring To-Date Highlights
Financial Restructuring / Administration
Richard Fleming, Ben Cairns and Mark Firmin appointed Joint Administrators of NMC Health PLC on April 9, 2020
Onboarding of the A&M team completed smoothly without disruption to business operations
CoCom established with regular engagement with the Company
Dual track insolvency venue (Chapter 11 and ADGM) undertaken to provide the Company with flexibility to achieve restructuringobjectives. Ultimate decision made to pursue an Administration in the ADGM courts in order to provide a debt moratorium/stable platform in the most cost efficient and expedient forum
Arranged an initial bridge facility of $50m, later increased to $68m to ensure ongoing sufficient liquidity
Commenced sales processes for non-core assets which will boost liquidity
New NEDs appointed to NMC Healthcare LTD (formerly LLC) Board with regular meetings held
Richard Fleming and Ben Cairns appointed Joint Administrators of NMC Healthcare LTD and 35 group entities (the “Company”) by order of the ADGM courts on September 27, 2020
Secured financing ($325m Administrative Funding Facility) which, along with proceeds from non-core disposals, will ensure sufficient funding throughout the Administration. The process comprised market testing and constant communication with lenders to ensure a transparent process and sufficient funding
Operations
Clinical quality metrics and outcome required to ensure appropriate standards of care
Collected and catalogued all licenses
Review of all IT systems to manage access
Detailed bottom up integrated 3-year business plan completed, as presented on August 19. Current YTD performance is ahead of the 2020 forecast. The business is ready for a second wave
Detailed site by site financial analysis was undertaken, to determine areas of opportunity
Performance improvement initiatives identified. Focus moved to tracking and supporting delivery, while identifying / implementing further measures
Procurement team established. Head of Procurement and key team members have been recruited
New Head of IT recruited, and team reorganisation / streamlining has begun
DRAFT
10
Significant progress has been made to restructure the Company, with the recent appointment of Administrators in ADGM providing the platform and stability to complete its financial and operational restructuring
Restructuring To-Date Highlights (continued)
Non-Core
Asset sale and wind down of Trading almost completed
Tender process undertaken and PWP chosen as M&A Advisor for Luarmia and Aspen and Moelis as advisor for Saudi JV
Review and decision to launch sales process for Aspen & Luarmia. Expected to complete by December 2020 / January 2021
Vendor & legal due diligence completed for Aspen & Luarmia
Reviewing options for Saudi JV & Oman
Finance & Liquidity
Signatories changed & A&M added as verifiers before payments released
Maintained payments to critical suppliers and payroll in a period of extremely tight liquidity
STCF forecast developed
Built daily cash report to monitor cash per bank account / activity
Identified additional cash opportunities
Identified and hired recruits to strengthen finance team including VPs of Treasury and Procurement
Financial clean-up & initial restatements commenced
Reconstructed balance sheets for 36 entities to support ADGM Administration filings
Investigations Materially advanced compiling evidence of financial misstatements dating back to 2012
Investigation is well progressed, with a good understanding of the nature of the fraud and dissipation of assets. Claims and litigation strategy now being developed
DRAFT
Table of Contents
11
1 Trading Update 4
2 Restructuring To-Date Highlights 8
3 Actions to Complete Restructuring 12Administration 15
Claims Adjudication 20
Investigation 24
Operations 31
Trading 35
Finance & Liquidity 37
Financial Restructuring 42
Non-core Sales 51
4 Close 53
DRAFT
12
With the Company in Administration, the Company has the secure platform to execute a financial and operational restructuring, undertake a claims adjudication process and commence the pursuit of claims against wrongdoers
Actions to Complete Restructuring
Key Steps/Workstreams Outcomes
Maximising return to stakeholders
Save the business
Pursuit of wrongdoers
Goals
Finalise financial restructuring through exit of the plan of
reorganisation or sale of core by H1 2021
Ready to launch litigation against wrongdoers
Viable and stable business focused on core operations,
supported by sustainable capital structure
Administration:• Recognition and enforcement• Debt moratorium• Claims adjudication• Exit mechanism via creditor vote
Restructuring:• AFF Syndication• Prepare and negotiate plan of
reorganisation• Run sale of the core
Finance:• Maintenance liquidity, control cash• Financial clean-up and improved
reporting• Rebuilding finance team
Operations: • Quality of patient care• Performance improvement initiatives and
cost optimisation
Investigations:• Preparation of litigation strategy• Secure litigation funding• Commence pursuit of wrongdoers
Non-core:• Complete current disposals• Implement options for Saudi JV & Oman
Cost-efficiency
DRAFT
13
Below we set out an overview of the key workstreams required as part of the Administration process
Notes: 1Scheme of Arrangement or Deed of Company Arrangement as an exit mechanism from Administration2The agreement which governs the relationship between PLC and the Company in respect of joint claims, notably sharing information, funding and allocation of proceeds
Workstream Timeline
Sep October January February MarchNovember December
Adm
inist
ratio
nRe
stru
ctur
ing
Fina
nce
Appt of JA
Short Term Cash Flow Forecast Liaising with and reporting to AFF lenders
Inve
stig
atio
nsNo
n-Co
re
Assessment of claimsRequest claims Outcome of Claims Scheme/DOCA voting
Plan of Reorganisation
Scheme/DOCA1 or Sale of Core
PoR Framework discussions with AFF and Cocom
Long Form Term Sheet Negotiations
Prepare marketing materials for Core Asset Sale
Lock Up Agreement
Scheme/Deed of Arrangement
Debt-Mapping and EPM
Recognition of Appointment, Reporting, Oversight of operations, liquidity and asset disposals
Appointment of key Finance team personnel, including appointment of CFO and driving transformation
Luarmia and Aspen sales
Review DependentSaudi JV and Oman Strategic reviews
AFF Syndication
Launch ProcessAgree Sales Process
Preparation of Marketing Materials
Dataroom open / VDD conducted
VDD firm apptDD materials to
AFF lenders
Based on strategy checkpointContinue evidence collection, memo preparations and assessment of claims
Strategy checkpoint
Investigation Protocol between PLC and LTD to be agreed
Possible Core Asset Sale
DRAFT
Table of Contents
14
1 Trading Update 4
2 Restructuring To-Date Highlights 8
3 Actions to Complete Restructuring 12Administration 15Claims Adjudication 20
Investigation 24
Operations 31
Trading 35
Finance & Liquidity 37
Financial Restructuring 42
Non-core Sales 51
4 Close 53
DRAFT
15
NMC Healthcare LTD and 35 of its subsidiaries (the ‘Companies’) were placed into Administration on September 27, 2020 by order of the Abu Dhabi Global Market (‘ADGM’) Court. Ben Cairns and Richard Fleming of Alvarez & Marsal were appointed Joint Administrators
Administration process
Control, oversight and governance
Recognition
Protection
Financing
The Joint Administrators are officers of the Court and have the statutory authority to act, and do all things necessary, in relation to the Companies. They have powers which mean they are able to make decisions. The Joint Administrators have delegated certain functions back to the management team, including clinical and medial oversight. The management team remain in situ and will continue to implement the proposed operational improvements.
Orders made by the ADGM Court (including the Administration orders) are enforceable onshore in the UAE. The Joint Administrators plan to seek onshore enforcement of the Administrations (and associated moratorium), and recognition and enforcement in the DIFC Court.
The commencement of the Administrations provide a statutory moratorium from adverse creditor action against the Companies. Creditors are not able to commence or continue any action (to recover debts or repossess assets) without leave of the court. The Companies now have the protection and ‘breathing space’ they need to continue to deliver quality services and can now focus on the launch of the proposed financial restructuring.
The ADGM insolvency legislation enables companies in Administration to secure priority financing. The ADGM courts approved the funding application made by the Joint Administrators on September 27, 2020. As such, the Companies now have access to $325m of priority financing which will be used within the operations, creating stability and a path to bridge to the proposed restructuring. Furthermore, non core asset sales will be utilised to assist financing needs.
Duties & powersThe Joint Administrators have a primary duty to act in the best interest of creditors as a whole. They also have certain statutory powers to investigate the affairs of the Companies, including interviewing individuals who may have information relevant to the circumstances leading to the insolvency.
ReportingWhilst the Joint Administrators intend to continue communicating with the lenders in the same way we are today, they do have certain statutory obligations with regards to reporting to all creditors. Key reporting includes the Proposals document (issued within 8 weeks of appointment) and 6 monthly Progress Update reports. If a Committee of Creditors is formed, updates will be provided to committee members at meetings.
DRAFT
16
The Joint Administrators and their team have already carried out certain actions that are either required by statute or are important for the implementation of the overall Administration strategy. The most important of these are summarised below
Administration process – statutory actions to date
• COMI Shift: Transition of the head office function of the Company to the ADGM, where those head office functions, the Joint Administrators, and meetings of the board are being held
• Consent protocol: A formal consent protocol has been agreed between the Joint Administrators and the Companies’ Executive Directors. This delegates certain powers back to the Executive Directors that otherwise would have remained with the Joint Administrators and is consistent with the overarching intention for the Administrations to be ‘light-touch’ to enable the Executive Directors to have sufficient autonomy in respect of operational decision-making
• Suppliers: We have communicated the fact of Administrations to the suppliers of the Companies, setting out updated terms and conditions of trade and new purchase order approval processes
• Employees: Employees of the Companies are being written to advising them of the appointment of the Joint Administrators. We are being careful to ensure that these communications reassure employees that their roles remain the same and that patient/customer operations are not expected to change, save for operational improvements and a strengthening of overall governance
• Landlords: Landlords are being written to advising them of the Administration appointments
• Advertisement: In line with statutory requirements, an advert has been placed in The National, a UAE news publication, notifying any reader of the Administrations. Additionally the ADGM Registrar has also advertised the Administration on its website
• Disclaimers: We have coordinated with the Companies’ IT team to ensure that the necessary statutory disclaimers have been placed on the Companies’ websites, employee emails and business documentation
• Creditor Listing: The Joint Administrators are in the process of compiling a list of creditors, including trade creditors
• Seeking further Court direction: We are working with our legal advisers to consider areas where we might need further Court direction. One of these is requesting permission to communicate by email to the Companies’ creditors (rather than by post) and to use an online Portal for creditors to submit their claims. We expect to be submitting a Court application in relation to this in the next week-or-so
• Systems and record-keeping: The Joint Administrators are required to keep their own records of the Companies’ day-to-day trading, as well as the costs and expenses associated with the Administrations, which has to be done on an entity-by-entity basis. Consequently, a lot of work has been done to align the Companies’ financial reporting in this way and develop a process whereby periodic reports can be imported into the Joint Administrators’ own records
• Bank account opening: As part of Joint Administrators’ statutory requirements and the overall improvements to operations and corporate governance, we are in the process of opening designated bank accounts for each Company in Administration
• Insurance: We are working closely with insurance providers to ensure the necessary cover is in place
DRAFT
17
Below we set out an overview of the statutory reporting requirements as part of the Administration process
ADGM Administration Statutory Reporting Timeline
Sept October January February MarchNovember December April
Date of Appointment
(27 Sept)Issue Proposals (8 Nov)(within 8 weeks of DoA)
Sets out proposed strategy for Administrations, dividend
prospects and likely exit route
Establish Committee of Creditors (CoC)
Min 3, Max 5 members. CoC act as representative of body of creditors. CoC have no formal obligation to
communicate with creditor body. Role is to consult with, and assist, the
Administrators in fulfilling their duties. The CoC cannot direct the
Administrators in relation to conduct of the Administration. CoC receive
informal adhoc updates
6 monthly Progress Report
(Cut off 27 Mar Issued by 27 Apr)
First CoC meeting(within 6 weeks of
establishment)
Regular CoC update meetings(including remuneration updates)
Administrators Report of Remuneration
(after CoC established)
Directors to submit a
Statement of Affairs
(As soon as reasonably practicable)
Initial Meeting of Creditors (if
requisitioned)(within 10 weeks of
DOA)
AFF and wider lender group reporting
Assessment of claims
Outcome of Claims
Request creditors submit Proof of Debt
(POD) claims
Repo
rting
& C
redi
tors
Mee
ting
Stat
emen
t of A
ffairs
& C
redi
tors
Com
mitt
eeCl
aims
DRAFT
18
Remit and Role of the Committee of Creditors
Membership
Constituted of between 3 and 5 members.
Committee members to be self nominated and should represent the interests of the main body of unsecured creditors. The nomination process will be set out in the Administrators Proposals (to be issued per the timetable).
Committee membership is voluntary and committee members are not remunerated for their time acting on the Committee.
Role & Purpose
Purpose of the Committee is to assist the officeholders in fulfilling their duties which includes assisting the Administrators with key decisions (for example regarding asset recovery strategies).
The Administrators are required to consider Committee views but are not directed by those views. Ultimate decision-making remains with the Administrators who are responsible for all actions taken during the Administration.
The Committee will agree the basis of the Administrators’ remuneration, subject to the approval of the Majority Financiers under the AFF, and the Administrators’ right to seek an order from the court if any portion of their remuneration is not approved.
Committee members are required to comply with certain confidentiality requirements and will be required to enter into a separate confidentiality agreement.
The Committee will also coordinate with other finance creditors, albeit they do not have a legal obligation to do so.
DRAFT
Table of Contents
19
1 Trading Update 4
2 Restructuring To-Date Highlights 8
3 Actions to Complete Restructuring 12Administration 15
Claims Adjudication 20Investigation 24
Operations 31
Trading 35
Finance & Liquidity 37
Financial Restructuring 42
Non-core Sales 51
4 Close 53
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20
In preparation for the proposed restructuring, the Joint Administrators intend to request financial creditors submit claims and provide all relevant supporting documentation. Claims will then be assessed with a view to determining the value and number of claims eligible to vote in the proposed restructuring
Claims Adjudication
Application to Court for
permission to use Portal
Joint Administrators to identify a list of
creditors
Instructions for info gathering and proof
form to be uploaded on
website
Possible application to court for permission to distribute to unsecured
creditors
Eligible creditors entitled to vote on
scheme
Appropriate provision for
disputed claims in Scheme
1
Early Oct
2
Mid Oct
Formal call for proofs to be made via Portal
Court sanction of Portal and distribution
Deadline for submitting proofs
JAs issue decisions on claims
Period for creditors to challenge rejections
3
Late Oct
4 5 6
End of Nov Dec Jan / Feb 2021
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21
Financial creditors will be asked to provide full supporting information in respect of any claim they make. We set out some of the key elements below
Draft Information Request Extract
Category 1 – Background to transactions / arrangements with the relevant Company1. Please identify the Company in respect of which you claim the existence of a claimed debt2. Please provide details of all the individual(s), at the Company or the relevant Group Company(s), with whom you had dealings in respect of the creation and
documentation of financial arrangements/claimed debt.3. Please provide details of the individual(s) and/or representatives of the creditor who dealt with the Company or relevant Group Company(s) in respect of creation and
documentation of the financial arrangements/claimed debt, including all current and previous relationship managers of the creditor for the Company / the Group Companies.
4. Please provide details of the history of your relationship with the Company / the Group Companies, since 2012 including a list of the facilities / accounts made available and their respective utilisation including the dates and periods of such arrangements or dates approved and utilisation balances at 31 December in each year.
5. Please provide details of how the financial arrangement/transactions giving rise to the claimed debt as at DoA originated.6. What was the purpose of the financial arrangement/transaction pursuant to which the claimed debt arose?7. Please provide details of the lawyers and other professional advisers (as appliable) engaged by you and with whom they interacted from the Company / the relevant
Group Companies at the relevant time in connection with the financial arrangement / transaction pursuant to which the claimed debt arose? If the transaction involved a Group Company, what information was provided to you as to whether the Group Company's lawyers/professional advisors were also instructed by the Company?
Category 2 – Documents8. Please provide copies of all documents connected to the claimed debt, including all contracts, executed facility and other finance documentation (and any variations
thereto), corporate authorisations, legal opinions, utilisation request(s), copies of all reporting and financial information produced to you by the Company / the Group Companies, invoices and statements of account.
9. Please provide full details and supporting documentation by which the Company entered into obligations to you, together with evidence produced to you to establish that the Company was duly authorised to enter into such obligations. Please provide copies of all resolutions, board minutes, confirmations or other relevant documentation from the Company's board, authorisation legal opinions and any correspondence (including requests made by you) relating to the same.
10. Please confirm the extent and nature of due diligence which you undertook in respect of the Company and/or the Group Companies prior to or post entering into the financial arrangement / transaction with the Company / the Group Companies and provide copies of all information produced to you by the Company / the Group Companies.
11. Where applicable, please provide copies of all account opening forms, terms and conditions and related documents, bank mandates including specimen signatures for all the Company and/or Group Company personnel mandated to operate the facilities.
Category 3 – Financial Information12. Please confirm the outstanding balance on the facility (to include itemised capital and interest) as at DOA. Please provide a full set of account statements showing all
advances and repayments (including interest). If you have received payments or made advances post DOA, please provide full details and an up to date statement of account. All principle, interest and fees should be itemised separately.
13. Please provide details of the Company / relevant Group Company’s bank account into which each draw-down was advanced.14. Please provide details of bank account(s) from (and into) which all payments from the Company / the Group Company(s) were received.15. Please provide details of all amendments, waivers, variations or extensions to the facility / contract. Please provide details of the circumstances of all such amendment,
variation or extension arrangements and confirm the Company / Group Company personnel with which such arrangements were made, together with copies of all correspondence and other documentation related to the same.
Category 4 – Other dealings with the Company / Group Companies16. Please provide details of any other arrangements / transactions between you (or your affiliates) and the Company, any other Group Company or person or entity
connected to the Company or its group, in the past six years.
DRAFT
22
Claims will be summarised by creditors on a Proof of Debt form. We set the main elements of this form below
Draft Proof of Debt Form Extract
1 Creditor Name(If a company, please also state company registration number)
2 Address of creditor for correspondence
3 Email address for creditor
4 Total amount of claim and outstanding uncapitalised interest (plus any applicable taxes)
Note: Any trade or other discounts (except discount for immediate or early settlement) which would have been available to the company but for the insolvencyproceedings, should be deducted from the above claim where relevant.
Where any payment is made in relation to the claim or set-off applied after date of administration, this should also be deducted.
For the purpose of proving for any debts incurred or payable in a currency other than United States Dollars (USD), the amount of those debts must be converted into USDat the official exchange rate prevailing on the relevant date. "The official exchange rate" for these purposes is the middle market exchange rate of the Central Bank of theUnited Arab Emirates at the close of business, as published for the relevant date in question. For the purposes of verification, please also specify the claimed debt in itsoriginal currency as well the exchange rate you have applied.
5 If the amount in 4 above includes outstanding uncapitalised interest, please state the amount
6
Details of any documents by reference to which the debt can be substantiated.
Please attach copies of the key documents substantiating the claims.
(Note that the office-holders may call for any further documents or evidence to substantiate the claim at their discretion.)
7 Particulars of how and when the debt was incurred by the Company
8 Particulars of any security held, the date it was given, and the value which the creditor puts on it.
Please note that with permission of the Court and, in certain circumstances, the agreement of the officeholder, a secured creditor may at any time alter the value whichthat creditor has put upon a security in a proof.
9 Particulars of any reservation of title claimed, in respect of goods supplied to which the claim relates
10 Preferential status - Give details of whether the whole or any part of the debt falls within any (and if so which) of the categories of preferential debts under section 227 of,and schedule 8 to, the ADGM Insolvency Regulations 2015 (as amended).
DRAFT
Table of Contents
23
1 Trading Update 4
2 Restructuring To-Date Highlights 8
3 Actions to Complete Restructuring 12Administration 15
Claims Adjudication 20
Investigation 24Operations 31
Trading 35
Finance & Liquidity 37
Financial Restructuring 42
Non-core Sales 51
4 Close 53
DRAFT
The documents created in, and the outputs of, the ongoing forensic investigation are confidential and legally privileged. The information provided in these slides is strictly without prejudice to that confidence and privilege, and no waiver of privilege is intended.
The Administrators’ Investigation team are working with legal advisers (Quinn Emanuel) to develop their legal strategy to recover losses and obtain compensation for damage which was done to NMC as a result of the fraud.
Evidence compiled to date shows that:
a) published financial statements were misstated dating back to at least 31 December 2012;
b) money and property was misappropriated from NMC;
c) the perpetrators sought to make NMC liable for debt of which it never received the benefit, or sufficient benefit; and
d) NMC’s losses are likely to be in the region of billions of dollars.
The Joint Administrators have identified a number of potential claims and are now in the process of seeking advice on (a) the merits of those claims, and (b) the appropriate forum in which to pursue them.
24
Overview of current statusAdministration Investigation – Claims identification & Assessment
DRAFT
25
Claims have been identified based on factual evidence, with assessment of merits, including legal merits, now in progress. Further work continues to progress rapidly to further evidence claims including asset assessments and potential quantum
Administration Investigation – Claims identification & Assessment
Workstream Completed Actions Remaining Objectives
1. Establishing, explaining and documenting the evidential fact base of the fraud
Established understanding how fraud perpetrated and by whom
Established evolution and chronology of various fraud schemes
Identified potential defendants Identified methods of dissipation
• Further evidence for claims: detailed evidence that will guide strategy and support the launch of claims to be collated with input of QE
2. Assessment of enforceability of judgments against potential defendants
Analysis of ability to enforce judgments against potential defendants
Identification and monitoring of other party actions
• Tracing of stolen property.• Continued monitoring of other actions / perpetrator dissipations.
3. Detailed review focused on potential collusion by financiers
Identified a number of financiers in respect of which there is prima facie evidence of collusion
Detailed reports compiled of evidence against those financiers
Preliminary classification to guide priority of further review
• Relevant financiers to be reviewed in detail – merits assessment and action plan to be compiled.
• Further cases where a preliminary review needed to assess if fuller review is merited - if progress to fuller review, merits assessments and action plan to then be completed.
• Initial assessment of certain other parties.
4. Detailed review focused on parties who failed in their duties to NMC
Information gathering from third parties Interviews conducted, including with former directors Document review completed Information protocol established to preserve
information
• Memos focused on evidence base to be completed.• Experts to be formally retained.• Preparation and launch of recovery actions.
DRAFT
26
Initial claims are well defined and supported by evidence .The investigation continues to progress rapidly.
Administration Investigation – Claims identification & Assessment
Workstream Completed Actions Remaining Objectives
5. Proprietary claims (e.g. tracing) with evidence
Evidence gathered for proprietary claims linked to dissipations (including acquisitions, property and loans).
Assistance provided linked to various operational situations involving these proprietary assets.
• Preparation and launch of recovery actions.• Tracing of further proprietary claims that have been flagged.
6. Interview and witness statements production
Fact finding interviews completed Process agreed and underway to record evidence
• Ongoing interviews to develop evidence • Record evidence• Identification and development of further witnesses
7. Potential Claim(s) against Professional Advisors
Mapping of professional advisors’ roles since IPO. Preliminary initial red flag assessment of professional
advisors.
• Prioritised assessment of the work of flagged advisors.• Reviews of certain prioritised professionals to be conducted.
8. Identification and assessment of additional potential defendants
Initial identification of additional potential defendants by reference to fact base established
Initial collation of preliminary evidence to review
• Prioritised assessment of the potential additional defendants based on merits assessments.
• Initiate information gathering where appropriate.• Strategy linked to other defendants to be prepared.
9. Electronic and hard copy evidence preservation and gathering
74TB+ of electronic and hard copy documentation secured to the investigation database
Evidence secured from the Companies, external advisors, ex-employees and whistleblowers
• Ongoing preservation, processing and review of data and documents from UAE, UK and India.
10. Periodic reporting, litigation funding and reporting
Periodic reporting to CoCom and Committee of Creditors
Support and preparation for ADGM Administration Litigation funding pursued up to initial terms
negotiations
• Reporting to Committee of Creditors.• Obtain funding, including for additional claims as identified for
ADGM entities.
11. Asset Recovery / Legal Strategy with legal merits assessment
Initial strategy outlined Areas of immediate focus determined
• Iterations of detailed strategy in light of evidence.• Legal merits assessment on strategy.
DRAFT
27
Workstream timelineAdministration Investigation – Claims identification & Assessment
October November December January February March
04 11 18 25 01 08 15 22 29 06 13 20 27 03 10 17 24 31 07 14 21 28 7 14 21 28
Evidential fact base of the general fraud
Workstream 1
Evidence gathering to support launch of claims - including: • The fraudulent activities• Perpetrators• Colluding parties• Benefits Derived• Professional advisors• Other parties with duties
Asset assessment of potential defendants
Workstream 2
Tracing of stolen property
Assessment of enforceability of judgments
Continued monitoring of other actions / perpetrator dissipations
Financiers
Workstream 3
Initial financiers identified to be reviewed in detail for potential collusionPreliminary review of further potential defendantsInitial assessment of other parties where required
Administration Investigation – Claims identification & AssessmentPre-actions and launch of Claim(s)
Strategy check point
TBC based on strategy check point
TBC based on strategy check point
TBC based on strategy check point
DRAFT
28
Workstream timelineAdministration Investigation – Claims identification & Assessment
October November December January February March
04 11 18 25 01 08 15 22 29 06 13 20 27 03 10 17 24 31 07 14 21 28 7 14 21 28
Parties who failed in their duties to NMC Workstream
4Memo focused on evidence base for claimPreparation and launch of recovery actions
Proprietary claims
Workstream 5
• Preparation and launch of recovery actions
• Tracing of further proprietary claims that have been flagged
Interview and witness statements production
Workstream 6
Ongoing interviews to identify fact based and supplement evidencePreparing records of evidence with QEIdentification and development of further witnesses
Professional AdvisorsWorkstream
7Prioritised assessment of the work of flagged advisors Reviews of certain prioritized professionals to be conducted
Administration Investigation – Claims identification & Assessment
Pre-actions and launch of Claim(s)
Strategy check point
TBC based on strategy check point
TBC based on strategy check point
TBC based on strategy check point
TBC based on strategy check point
DRAFT
29
Workstream timelineAdministration Investigation – Claims identification & Assessment
October November December January February March
04 11 18 25 01 08 15 22 29 06 13 20 27 03 10 17 24 31 07 14 21 28 7 14 21 28
Identification of additional potential defendants
Workstream 8
Prioritised assessment of the potential additional defendants Initiate information gathering where appropriateStrategy linked to other defendants to be preparedElectronic and hard copy evidence preservation
Workstream 9
Ongoing preservation, processing and review of data and documents from UAE, UK and India
Periodic reporting, litigation funding and reporting
Workstream 10
Reporting to Credit committee and CoCom
Pursuit of funding for additional claims as identified
Asset Recovery Strategy
Workstream 11
Iterations of detailed strategy in light of evidence Legal merits assessment on strategy
Administration Investigation – Claims identification & Assessment
Pre-actions and launch of Claim(s)
Strategy check point
TBC based on strategy check point
TBC based on strategy check point
TBC based on strategy check point
TBC based on strategy check point
DRAFT
Table of Contents
30
1 Trading Update 4
2 Restructuring To-Date Highlights 8
3 Actions to Complete Restructuring 12Administration 15
Claims Adjudication 20
Investigation 24
Operations 31Trading 35
Finance & Liquidity 37
Financial Restructuring 42
Non-core Sales 51
4 Close 53
DRAFT
31
Reviewing and ensuring current levels of clinical care are appropriate, with relevant insurance coverage and understanding ‘true’ historic performance
Operations
Workstream Completed Actions Remaining Objectives
Operational Assessment
Assessed site by site clinical performance through detailed review of clinical quality metrics and outcomes
Benchmarked at a high level clinical complaints and malpractice cases, as another measure of clinical standards and potential areas of risk.
On a facility by facility basis, reviewed staffing levels, turnover and key people metrics, to ensure sufficient/well trained staff were in place to deliver high standards of care
Visited a number of the key facilities to undertake a high level visual assessment of the quality of infrastructure and repair of facilities.
• Continue to monitor• Establish a Clinical Governance Committee
Historical Performance
Undertook assessment of a variety of systems and data sources to ascertain where/how the fraud was perpetrated and determine the ‘best available’ source of historical data.
In determining the ‘best available’ data source, undertook a series of (un-audited) verifications
Developed high level preliminary un-audited (subject to change) restatement of 2018 FY audited key results and 2019 HY reviewed results
Conducted site by site reviews to understand key levers/impacts of performance
Created an internal benchmarking report identifying best performers and outliers on a site by site basis across a range of metrics
• Continue to refine accuracy of historical results through the Finance workstream
• Like for like comparison of actual performance vs. business plan
Medical Malpractice Ensured Medical Malpractice insurance is in place and not affected by Administration or ADGM • Continue to monitor
DRAFT
32
Developed 3 year business plan, ensured continuity of supply through liquidity crisis, review IT security and work on resolving license issues
Operations
Workstream Completed Actions Remaining Objectives
Business Plan
Built bottom up, site by site a 3 year consolidated business plan FY20-22.
Identified and incorporated into the business plan a range of performance improvement initiatives, markedly improving the 3 year EBITDA
• Support implementation of performance improvement initiatives • Establish PMO and validation of benefit achieved
Procurement
Managed suppliers through liquidity crisis, (where some had stopped supply) to maintain minimum supply and allow hospitals to continue to operate through COVID
Supported in recruitment and onboarding of Head of Procurement and one category head
Identified and began implementation of cost savings initiatives Worked with cross functional teams to develop and implement
new centralized, robust Purchase Order process and spend controls
• Work with newly appointed Head of Procurement to implement robust procurement processes and policies to increase spend control and discipline
• Support teams with initiatives to implement business plan initiatives
• Manage payment of past dues (pre-ADGM as appropriate) and move suppliers to standard terms
IT Security & Optimisation
Reviewed access across all systems, to ensure only current employees are able to login into these
Identified areas of improvements for information security Supported recruitment and onboarding of new Head of IT Identified areas of cost savings and commenced
implementation of these Smooth transition of companies to ADGM is provided
• Support implementation of cost savings initiatives• Complete the transition to a new organizational structure in IT• Support implementation of consolidation software• Support team with information security initiatives• Initiate data governance implementation
Licenses
Collected and catalogued all licenses and associated documents
Explored and developed options to amend licenses Supported entry into ADGM for 36 entities, removing the need
to amend these licenses
• Complete amendments as required for remaining impacted licenses
DRAFT
33
Workstream timelineOperations
Phase 3 – Restructuring Plan or Sale of Core
October November December January February March4 11 18 25 1 8 15 22 29 6 13 20 27 3 10 17 24 31 7 14 21 28 7 14 21 28
Operational Assessment
Establish Clinical Governance Committee
Business Plan
Support implementation of performance improvement initiativesIdentify further opportunities to drive bottom line performanceTrack progress against deliverablesSupport in developing revised FY21 Budget
Procurement
Manage payment of past dues (pre-ADGM as appropriate) and move all suppliers to standard termsImplement robust Procurement Processes & DisciplinesConsolidations of suppliers based -creation of preferred suppliersSupport in identification and implementation of cost savings initiatives
IT
Support implementation of cost savings initiativesSupport Data center relocationComplete the transition to a new organizational structure in ITSupport implementation of consolidation softwareSupport team with information security initiativesInitiate data governance implementation
Licenses Process other license changes
DRAFT
Table of Contents
34
1 Trading Update 4
2 Restructuring To-Date Highlights 8
3 Actions to Complete Restructuring 12Administration 15
Claims Adjudication 20
Investigation 24
Operations 31
Trading 35Finance & Liquidity 37
Financial Restructuring 42
Non-core Sales 51
4 Close 53
DRAFT
35
Responsible for distribution of products across UAE mainly in healthcare, consumer and education. In April 2020, the decision was made to launch a sales process
Trading
Workstream Completed Actions Remaining Objectives
TADS LLC sale process Sale process completed on May 19 Total transaction value of AED 8.7M received
• N/A
New Medical Center Trading LLC: Transfer of principal contract associated assets & liabilities
Transaction closed with three distributors Net cash generated c. AED60m, reduced payables of
c. AED40m• Execute remaining balance transfers
New Medical Center Trading LLC: Sale of assets and liabilities
Registered interest of +35 parties receiving 5 binding offers Signed SPA with Yas Holding for a final price of up to AED 45M Engaged with secured lenders on respective assets and obtained
support to execute the transaction
• Finalise the transfer of vehicles and leasing contracts (underway)• Transfer of other fixed and movable assets, subject to release of
existing securities• Receive funds in escrow, pending final Condition Precedents
Cytomed LLC Sales Process Registered interest of 17 parties receiving 3 binding offers Signed SPA with Yas Holding for a final price of AED 50M Obtained support to execute the transaction from secured lenders
• Obtain authorisation for the sale of the shares held by the nominee• Execute and close transaction• Receive funds in escrow, pending final Condition Precedents
Expected up to AED c. 200m proceeds to be generated through series of entity sales as well as “controlled” winddown
Facilitated the transfer of 600-800 employees
Avoided a disorderly “uncontrolled” wind-down - likely to have resulted in proceeds of c. AED50m and employee terminations
Sales process results
Note: NMC Trading waterfall will only be determined once the debt mapping has sufficiently progressed, as part of the Financial Restructuring workstream. Expected completion of the remaining transactions by end of December 2020
DRAFT
Table of Contents
36
1 Trading Update 4
2 Restructuring To-Date Highlights 8
3 Actions to Complete Restructuring 12Administration 15
Claims Adjudication 20
Investigation 24
Operations 31
Trading 35
Finance & Liquidity 37Financial Restructuring 42
Non-core Sales 51
4 Close 53
DRAFT
37
Focus on managing liquidity, ongoing reporting and ultimate handover of STCF to NMC staffFinance & Liquidity Workstream
Workstream Completed Actions Remaining Objectives
Short term liquidity, cash management and payments
Maintained payment to critical suppliers and payroll in a period of extremely tight liquidity, through management and improvement of payment committees with various unit heads
Developed and monitored 2-week liquidity outlook to ensure full visibility and control on liquidity / cash balances
Conducted and improved weekly cash committee meetings with key stakeholders to discuss expected collections and payments
Identified additional cash opportunities and liaised with relevant stakeholders to ensure full realization
Ensured that all transactions were reviewed and verified before processing
• Continue tight liquidity management and seek to manage the business in line with the AFF cash flow forecast (“Initial Budget”)
• Implement tight payment and liability commitment processes following appointment of Administrators
• Establish new purchase order, CAPEX, and payment policies and tracking
CFF and Reporting
Implemented improvements to weekly 13-week STCF forecast by activity and by cash flow group
Modelled several iterations of yearly cash flow forecast to prepare for Administration, based on updates to timing and funding expectations
Improved weekly variance analysis by activity and by line, to track Actuals against forecast
Built daily cash report to monitor cash by bank account / activity
• Monitor liquidity and variances against the AFF cash flow forecast (“Initial Budget”)
• Build dual reporting processes:• Detailed AFF reporting requirements• Statutory Administration reporting requirement
New Money Arranged initial bridge facility of $50m, later increased to
$68m Secured new $325m facility
DRAFT
38
Focus on managing liquidity, ongoing reporting and ultimate handover of STCF to NMC staffFinance & Liquidity Workstream
Workstream Completed Actions Remaining Objectives
Bank accounts
Introduced A&M verification process before release of payments
Progressed opening of new bank accounts where possible to facilitate operational requirements by entity
Restored critical inactive ADCB bank accounts Successfully pursued release of attachments on bank
accounts Monitored daily cash balances by cash flow group / unit
• Continue opening of bank account by legal entity –administer in accordance with AFF where appropriate
• Restore remaining critical inactive ADCB bank accounts
Treasury team
Reinforced treasury team with new Group Treasurer and other selected staff to assist with STCF forecast, payments entry and reporting
Replaced PwC team and refined reporting
• Streamlining of “procure to pay” process and review of interaction between treasury, accounting and procurement
• Train and strengthen Treasury team in order to hand over STCF forecast and cash management process
Others
Analysed and liaised with lawyers in relation to purported assignments over receivables and managed relationship with insurers – challenged purported assignments where deemed imperfect
Restored operationally required bank guarantees (cash backed)
• Seek immediate restoration of receipts into NMC-controlled accounts from insurers with purported assignments following Administration Order
• Seek recovery if prior funds from purported assignments were improperly retained
• Continue liaising with insurers to ensure complete and timely inflows
DRAFT
39
Financial Control and Balance Sheet clean-upFinance & Liquidity Workstream
Workstream Completed Actions Remaining Objectives
Financial control improvements (~ CFO role)
Controlling group: Improved and oversaw monthly close and reporting process; introduced additional control and rigour
Internal Control: Identified process risk & internal control deficiencies : RCM (revenue cycle management), Payroll, Treasury, Procurement, Inventory Counts, PPE verification, Cash Audit
Organisation design and finance excellence: Supported the recruitment of key finance personnel (including appointment of Group Treasurer)
Subsidiary Audits: Supported appointment of auditors for international subsidiaries (KSA and Aspen)
• Controlling group: Oversee continuous evolution of monthly close and reporting process and rebuild confidence in financial reporting
• Internal Control: Support implementation of enhanced internal control processes
• Organisational design and finance excellence: Recruit key personnel and drive finance transformation
• Audit: Manage selection process and appointment of a statutory auditor (subject to agreement)
Balance sheet clean-up (subject to ongoing work)
Conducted extensive interviews and validation procedures to understand the nature and likely extent of fictitious entries and accounting errors included in the accounting records
Designed process to identify individual fictitious and manipulation entries and a template to collect detailed adjustment entries
Collected detailed adjustment entries at legal entity level Reviewed consolidated balance sheet as at June 2020 Identified and quantified significant fictitious account balances and
accounting errors Recorded adjustments (clean-up and accounting errors) in the
August 2020 Consolidated Financial Statements at a consolidation level
• Ensure consolidation level adjustments are incorporated into the accounting records at a legal entity trial balance level
• Finalise determination of the consolidation adjustment entries between current and prior years
• Manage BDO (technical accounting support) to enable them to report on detailed adjustments (and resulting accuracy of consolidated balance sheet at June) and documentation of notable IFRS considerations to support statutory audits
• Complete detailed adjustment entries at legal entity level• Prepare model of reported to adjusted figures bridge at legal entity
level • Support drafting of restated Financial Statements in accordance
with IFRS for periods ending December 31,2018; December 31, 2019; June 30, 2020
ADGM Administration filing
Supported the ADGM Administration filing process including: Prepared simulated balance sheets for the 36 filing entities Modelled adjustments to collated balance sheets to correct for
fictitious and / or mis-stated balances and accounts and inclusion of co-borrowing and debt guarantees
Reflected purported debt per filing entity to support filing submission
• Support statutory Administration reporting requirements including submission of 36 filing entity balance sheets and AFF / lender specified data requests
DRAFT
40
Workstream TimelineFinance & Liquidity Workstream
October November December January February MarchWeek Ending: 04 11 18 25 01 08 15 22 29 06 13 20 27 03 10 17 24 31 07 14 21 28 7 14 21 28
Liquidity & Cash
Management
Manage liquidity and monitor against AFF cash flow forecast (“Initial Budget”)Establish new purchase order, CAPEX, and payment policies and trackingImplement tight payment and commitment processes following appointment of Administrators
CFF and Reporting
Bi-weekly actual vs. forecast variance analysisMonthly cash flow reforecastDaily cash position by bank account
New Money Liaise with Lenders to ensure smooth process in utilization of the new facility
Bank accounts Continue opening of one bank account per filing legal entityRestore all critical old NMC bank accounts by updating signature mandates
Treasury teamTrain/strengthen treasury team for handover of STCF forecast and cash management processStreamline “procure to pay” process and review interaction between treasury, accounting and procurement
OthersSeek restoration of receipts from insurers with purported assignmentsContinue liaising with insurers to ensure full and timely inflowsAssess options for guarantees (reduce/avoid cash backing)
Balance sheet clean-up
Apply consolidation level adjustments into entity trial balancesAllocate adjustments between current and prior yearsManage BDO and drive output of adjustment validation report as at June 2020Complete detailed (and numerous) adjustment entries at legal entity levelPrepare report of reported to adjusted figures bridge at legal entity levelDraft & finalise restatement of financials for FY 2018, FY 2019 and HY 2020
ADGM Filing Support statutory Administration reporting requirements
Support, oversight and skills transfer
Oversee continuous evolution of monthly close and reporting processImplement improvements to internal control systemContinue recruitment of key personnel and drive finance transformationSelection process and appointment of statutory auditor
Phase 3 – Restructuring Plan or Sale of Core
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Table of Contents
41
1 Trading Update 4
2 Restructuring To-Date Highlights 8
3 Actions to Complete Restructuring 12Administration 15
Claims Adjudication 20
Investigation 24
Operations 31
Trading 35
Finance & Liquidity 37
Financial Restructuring 42Non-core Sales 51
4 Close 53
DRAFT
42
Below we set out an overview of the key workstreams required as part of the restructuring process.Financial Restructuring Process Timeline
Sep October January February MarchNovember December
PoR
Fram
ewor
kLo
ng F
orm
Ter
m
Shee
tsLo
ck-U
p Ag
reem
ent
April
Sche
me o
f Ar
rang
emen
t
Discussions with AFF and CoCom
All-Lender
Call
31st:: Distribute short form TS to All Lenders
Agree Exit Facility long form term sheet with AFF
Agree Exit Instruments long form term sheet with AFF and CoCom
Agree form of LUA
Claims Filing and Adjudication Process
Debt-Mapping and EPM
All-Lender
Call
Milestones
Release long form term
sheets to all lenders
Core
As
sets
Sa
le
Non-core assets sale (Phase 2 end of October) and 2-3 months regulatory filing to completion
Long form documentation
Long-stop28th
Lenders to have signed
LUA
Court ProcessInitial Hearing
Filing
Sanction Hearing
Lenders’ Credit Committee
Challenge Period
Prepare marketing materials for possible Core Asset Sale 28th
PoR or Sale
DRAFT
43
Entering into ADGM Administration with secured funding in place has been the key milestone to date. Focus now turns to implementation of a Plan of Reorganisation
Financial Restructuring
Workstream Completed Actions Remaining Objectives
Recognition and Enforcement of ADGM Administration
Obtained executory administration order from ADGM• Enforce order onshore in UAE• Obtain recognition of order in DIFC
Administrative Funding Facility
Secured $325m financing to enter into ADGM Administration
• Syndication of the AFF to be launched on October 12, 2020• Syndication to be closed 15 business days later, on
November 1, 2020
Debt Mapping / Entity Priority Model Claims filing process to be launched
• Review of validity of each claim filed• Develop Entity Priority Model (“EPM”) to assess economic
position in the group
Business Plan Released on 19 August including restatement of financials and 2020E-2022E forecasts • Current trading updates
Plan of Reorganisation (”PoR”) Presented framework for PoR on 19 August
• Present PoR term sheet to all lenders by 31 October 2020• Agree lock-up agreement with relevant creditor majority
Scheme of Arrangement Initial assessment Scheme of Arrangement vs. Deed of Arrangement completed
• Class composition• Scheme filing requirements
Sale of Core Assets Not initiated• Plan to sell Core Assets being prepared• Core Asset Sale Longstop Date April 30, 2021
DRAFT
AFF syndication will be launched on Monday 12th October to offer to all eligible creditors the opportunity to receive a share of the AFF; $65m AFF will be offered to interested parties
AFF Syndication Overview
Syndication Steps
NDA and Confirmation of Eligibility
Review of Information Pack
Review of Long-Form Finance Documentation
A
C
B
Commitment Letter
D
• Interested parties will receive an NDA to be signed • Will need to provide a proof of holdings as of 23 July 2020• Confirmation that interested parties haven’t launched any creditor action
against NMC− Otherwise, interested parties need to agree to any freeze or stay or
removal on any actions to be eligible
• Review the information pack that will be distributed and comprising of additional details on the business plan communicated on 19 August 2020, further details on AFF collateral assets and a summary term sheet
• Review and agree the signed long form documentation for the AFF• Seek internal credit committee approval to participate in the AFF on the basis
of the Information Pack and the Long-Form Documentation
• With the approval of credit committee, interested parties will need to execute the commitment letter with their approved participation amount
Allocation Mechanics
E • Allocation process will be conducted as follows:• Proportionate to the amount of exposure in the unsecured debt• Minimum allocation entitlement of AED5m (equivalent to USD1.4m )
to receive a firm allocation• Maximum allocation to be received can not exceed 20% of the
exposure in the old debt
• Prior to October 12
• From October 12 and as soon as NDA signed
• November 1 5pm UKT
• Communicated by 14th November
Timing
Source: PWP
44
DRAFT
For the exit from ADGM Administration, creditors will have the choice between 1) a Plan of Reorganisation and owning the Company for 2-3 years before selling with the benefit of improved trading or 2) selling the core business out of the Administration to the highest bidder in the circumstances
ADGM Administrative Illustrative Options
• Higher recoveries than in an Exit Sale• Creditor-led plan where holders of Exit Instruments can
decide on optimal timing for a sale of NMC as part of a competitive M&A auction process
2) Exit Sale1) Reorganisation Plan (Creditor-Led)
What Will Unsecured Creditors Receive?
• Unsecured lenders will receive Exit Instruments for their pro rata share in the unsecured debt
− Depending on AFF’s election, unsecured creditors will receive at least 58% of Exit Instruments (see page 46)
• NMC could be fully recapitalised with $203m of secured debt and between $325m and $650m of Exit Facility depending on what AFF lenders decide to do for their refinancing
What Is The Impact On
Recoveries?
What Are The Benefits?
• Through the Exit Instruments, unsecured creditors will be able to decide on the timing of a sale
• Higher recoveries will be achievable once NMC can demonstrate a current trading improvement towards $212m 2022E EBITDA
• No immediate cash-out• Governance will need to be put in place post
Administration to take decisions and set the strategy for NMC
• Criteria for a future sale need to be defined as part of the transaction to regulate future decision taking to maximise recoveries
A
C
B
What Are The Key Considerations?
D
• Exit once and for all to the highest bid in the circumstances• Potentially, and depending on value, cash event for
unsecured creditors albeit much lower than in the Plan of Reorganisation
• No need to receive Exit Instruments and own NMC
• Unsecured lenders will receive 100% of the cash proceeds from any sale out of Administration
• Such proceeds will be received after $203m of secured debt and the $650m AFF (excluding any capitalised interests) are repaid
• M&A process for the Core Assets will be run with third party and AFF have the option to bid into the process with a creditor-led fund and ability to credit bid their claims
• Lower recoveries than in the Plan of Reorganisation as NMC will not have time to fully recover its run-rate EBITDA
• Once NMC is sold, creditors will be fully discharged with no ability to recoup any future value if the business outperforms
• Trade-off between cash today vs. higher future recoveries• Unsecured creditors will not benefit from improved
EBITDA performance• Aura of distress on the back of failing to secure successful
vote for the Plan of Reorganisation may not be supportive of value maximisation
Fall-back if Plan of Reorganisation is not voted forSource: PWP
45
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Plan of Reorganisation – Pro Forma Capital Structure
(In $M) Today Plan of Reorganization
Post ADGM Filing Option 1 Option 2
Fixed & Floating Charges 203 203 203
AFF - New Cash 325 - -
AFF- Elevated Loans 325 - -
Exit Facility - 325 650
Unsecured Debt 5,741 - -
Split Exit Instruments
AFF - 42% -
Unsecured Debt - 58% 100%
Description
NMC raised $650m AFF to fund through ADGM. Treatment of unsecured debt to be agreed during ADGM
As part of plan, assumes 100% AFF elects to receive Exit
Instrument
Here, none of AFF lenders elect to receive
Exit Instrument
Form of Exit Instruments to be agreed
Source: PWP
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Workstream timelineFinancial Restructuring
October November December January February MarchWeek ending: 04 11 18 25 01 08 15 22 29 06 13 20 27 03 10 17 24 31 07 14 21 28 7 14 21 28
Claims
Claims filingAdjudication of claimsDebt MappingEntity Priority Model
AFF Syndication
NDA to be issuedLaunch of SyndicationClosing of SyndicationAllocation
PoR
Term Sheet presentation to all lendersAgree terms with AFF lenders/CoComLong form term sheet – discuss and agree exit facilityLong form term sheet – discuss and agree exit instruments TSAgree form of Lock-Up Agreement (“LUA”)Lenders to approve PoR (formally approve LUA)
Scheme of Arrangement
Signed LUA Indicative Long stopInitial hearing and voteChallenge periodSanction hearing
Sale of Core
Appointment of VDD firmProvide DD materials to AFF lendersPrepare marketing materialsAgree sales process with AFF lendersLaunch Sales process, if required
Phase 3 – Restructuring Plan or Sale of Core
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AFF Summary Terms
Structure of Facility Elevation structure on the basis of $1 of new money for $1 elevated debt
Two tranches: conventional and Islamic
Amount
$650m facility comprising of:
‒ $325m, of which ADCB is underwriting $250m, of new money comprised of $257m of New Money Loans and $68m of Refinancing Loans
‒ $325m of Elevated Loans
Currency will be AED
Interest New Money Loans and Refinancing Loans: margin of 5% cash and 5% PIK p.a.
Payable monthly
Default interest/ profit: 2% p.a
Commitment Premium 2.5%
Uses of Proceeds i) Repay the $68m Bridge Facility; and ii) fund Company through the Administration process subject to certain restrictions
Ranking / Security
Pursuant to ADGM Insolvency Regulations 2015 Section 109A (2) (a) loan ranks ahead in right of repayment, of all administrative expenses (save for Administrator fees, costs and expenses), floating charge holders and unsecured creditors (save for elevated debt)
First lien security over assets of Luarmia, Aspen and Saudi JV
Maturity Earlier of (i) the 12 month anniversary of the Closing Date (the “Scheduled Maturity Date”), (ii) the date the Company is placed into
liquidation, (iii) the date the Administrators determine the purpose of the ADGM Administration has been achieved including by satisfaction of the Plan of Reorganization Condition (iii) the occurrence of a Change of Control.
Covenants
Information Covenants: inter alia, debt mapping, fortnightly call, monthly and quarterly reporting, update on forensic actions, access to management
Sale Covenants: ‒ Company to use reasonable endeavours to sell Luarmia, Aspen and Saudi JV‒ Core Assets:
o Long Stop Date for completion of Core Assets Sale: 30 April 2021o To the extent a reorganization option is not approved by required votes by 28 February 2021, Core Assets Sale
to be launched
Agent ADCB (Following standard LMA provisions) as Global and Security Agent
EIB: Murabaha agent
Source: PWP
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AFF Summary Terms (continued)
AFF Core Asset Purchase Option
AFF Lenders and Financiers as to establish a special purpose vehicle to acquire the Core Assets in the following events:
‒ the Plan of Reorganization Condition has not been met on or before 28 February 2021, (b) the Plan of Reorganization Condition has been met on or before 28 February 2021 but the reorganization contemplated by such plan has not been effected on terms satisfactory to the AFF Lenders on or before 28 February 2021, or (c) the occurrence of an Event of Default then the Administrators will commence a marketing process for the Core Assets accordingly to the timeline set out in ‘Sale Covenants’ above
‒ the Administrators receive and accept an offer (or offers) for a value for the Core Assets which represents a better return for unsecured creditors than that represented by the Core Assets Transfer Price then, , upon completion of a sale of any of the Core Assets the Administrators will be obliged to repay the Administration Funding Facility.
In the context of a competitive bidding process, the Administrators will (a) allow the AFF Lenders the right to credit bid alongside other third party bidders; and (b) also allow the AFF Lenders the right to offer more than the highest third party offer for the Core Assets within a pre-agreed period of time of receipt of such offer (provided that the other terms are not materially less favourable to the unsecured creditors than the third party offer).
Plan of Reorganization Condition
Reorganization term sheet to be distributed to lenders by 31 October 2020
In the event that a Plan of Reorganization is not binding on all lenders by 28 February 2021, Company to launch a sale of the Core Assets
AFF Exit Instrument AFF lenders and Financiers will be offered up to 42% of any Exit Instruments (depending on the amount of take-up)
Voting 66.67% in value for amendments, waivers or modifications
70% Super Majority threshold for certain amendments, waivers or modifications
Customary entrenched terms, including changes to ‘money’ terms, release of guarantees or security to require unanimous consent
Transferability Right of assignment and participation rights subject to AFF Agent’s consent not to be unreasonably withheld
Governing Law
The AFF Finance Documents will provide that the Obligors will submit to the non-exclusive jurisdiction and venue of the courts of the ADGM
ADGM law shall govern the AFF Finance Documents (other than security documents to be governed by local law, to be determined by the AFF Agent)
Source: PWP
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Table of Contents
50
1 Trading Update 4
2 Restructuring To-Date Highlights 8
3 Actions to Complete Restructuring 12Administration 15
Claims Adjudication 20
Investigation 24
Operations 31
Trading 35
Finance & Liquidity 37
Financial Restructuring 42
Non-core Sales 51
4 Close 53
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The disposal of Aspen and Luarmia is underway, with strategic options currently being assessed for Oman and Saudi JV
Non-core
Workstream Completed Actions Remaining Objectives
Aspen
Appointment of advisers Negotiated standstill with landlord Preparation of marketing materials Preparation of data room Tax/structuring advice received Vendor and legal due diligence due diligence Disposal process launched
• Receipt of binding offers• Evaluation of final bids and contract negotiations• Execution of sale
Luarmia
Appointment of advisers Marketing in conjunction with Boston IVF Preparation of marketing materials Preparation of data room Tax/structuring advice received Vendor and legal due diligence due diligence Disposal process launched
• Receipt of binding offers• Evaluation of final bids and contract negotiations• Execution of sale
Oman Review of the underlying assets • Review of strategic options underway
Saudi JV Review of the underlying assets • Review of strategic options underway
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Table of Contents
52
1 Trading Update 4
2 Restructuring To-Date Highlights 8
3 Actions to Complete Restructuring 12Administration 15
Claims Adjudication 20
Investigation 24
Operations 31
Trading 35
Finance & Liquidity 37
Financial Restructuring 42
Non-core Sales 51
4 Close 53
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– The Administrations are facilitators of the outcome
– There are a significant number of actions and steps required to complete the restructuring and deliver value to all stakeholders
– The best outcome for stakeholder requires all lenders need to play their role by engaging with the process (i.e provide timely Proof of Debts with all available supporting documentation)
– Joint Administrators are focussed on increasing communications with all lenders
– Next all lender call tentatively booked for either November 4 or November 11
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Close
Key points to take away
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Thank You