NMC Health (NMC) founder BR Shetty has quit the board after the revelation of the share uncertainty last week. The company had announced on 10 February that it was not sure of the number of shares owned by Dr Shetty and major shareholders Saeed Mohamed Butti Mohamed Khalfan Al Qebaisi and Khaleefa Butti Omair Yousif Ahmed Al Muhairi, and that Dr Shetty and Mr AI Mulhairi would be removed from board discussions as this was investigated.
Mr Al Muhairi resigned on 14 February, and two other directors quit alongside Dr Shetty.
Middle East hospital owner and operator NMC has been in strife since hedge fund Muddy Waters released a report into its accounting practices, governance and related party transactions in December. While the company has said the report is flawed and misrepresents its accounts, NMC’s valuation has cratered. It was worth over £5bn before Muddy Waters went on the attack, and now has a market capitalisation of £1.6bn.
The appointees of Dr Shetty who also quit were chief investment officer Hani Buttikhi and non-executive director Abdulrahman Basaddiq, who had served on the board since 2017 and 2014, respectively. Mark Tompkins, who is now solo chairman after Dr Shetty’s departure, said the company appreciated the situation that the two men felt they had been placed in because of the recent notifications from its principal shareholders.
An exchange announcement said that Mr Al Qebaisi and Mr Al Muhairi were not sure who actually owned around 12m shares in the company, with 11.5m accounted for but without a clear owner and 430,000 missing completely. The company has just over 200m shares out. The Financial Conduct Authority told the Financial Times it was “making enquiries with the relevant parties”.
There are still further questions to be answered by the company. It hired the firm of former FBI director Louis Freeh in January to look at Muddy Waters’ allegations, with a report due before the 2019 results come out in March.
Before the share ownership confusion, the Muddy Waters-triggered share plunge had caused separate ructions because of the complex financial arrangements of the ‘principal shareholders’.
Mr Al Qebaisi and Mr Al Muhairi had to sell off £375m in shares to “reduce outstanding indebtedness of themselves and other corporate entities owned by them”. The Financial Times reported that one banker said this was probably driven by margin calls. A margin call is when a borrower has to front up more cash or assets to maintain debts secured by shares after their value drops.
Fellow Dr Shetty company Finablr (FIN), which owns Travelex, has said that the arrangements between the NMC principal shareholders could affect its own share register. “The position is being reviewed by the company and a committee of independent directors of the company,” Finablr said. The company's shares are trading at 80p, half their May 2019 listing price.
