18th Feb 2020 18:12
(Alliance News) - Embattled NMC Health PLC on Tuesday said it will "urgently seek clarity" about its former chair's "shareholding arrangements" after it received notice that his investment company sold GBP111.8 million worth of shares across a series of transactions earlier in February.
Bavaguthu Raghuram Shetty, founder the Abu Dhabi-focused hospital group, resigned as non-executive chair on Monday. He had been banned from attending board meetings for inaccurately reporting shareholdings in the company.
Across six transactions between February 3 and February 6, BRS International Holding Ltd, which Shetty is the sole shareholder of, sold 10.9 million NMC shares for GBP111.8 million, according to an automatically generated statement received by NMC on Sunday.
NMC added: "The board remains disappointed in the disclosures made by Dr Shetty and has continued to urgently seek clarity from him in relation to his shareholding arrangements and his holdings of ordinary shares. The board continues to encourage Dr Shetty and his advisers to ascertain the correct legal position in relation to his ownership of ordinary shares without further delay.
"Dr Shetty has advised the company that, both in his personal capacity and in his capacity as the sole director of BRS International, he has requested further information from the bank in respect of above transactions; he has, however, advised the company that he has not yet received a response."
During the dates of the transaction, Shetty was still chair of NMC. The FTSE 100-listed company on Monda also announced the departures of Chief Investment Officer Hani Buttikhi and Director Abdulrahman Basaddiq. Their resignations were also with immediate effect.
The exodus on Monday came as NMC tried to unravel the shareholdings of the former chair Shetty as well as investor Saeed Mohamed Butti Mohamed Khalfan Al Qebaisi and now-resigned vice chair Khalifa Butti Omeir Bin Yousef, who stepped down on Friday.
The company on Friday laid out the complex share dealings but said information was not independently verified and urged the three investors to clarify their shareholdings.
The share dealings between the trio involved Shetty pledging NMC shares to banks as loan securities, a deal in which Al Qebaisi and Omeir Bin Yousef were not part of.
Short-selling firm Muddy Waters Capital LLC in 2019 raised doubts over NMC's financial statements, including reported profit and levels of debt, and a USD107.4 million investment by NMC in the redevelopment of NMC Royal Women's Hospital, previously known as Brightpoint Royal Women's Hospital.
"Red flags" in this investment included the cost being USD7,700 per metre squared, exceeding Muddy Waters' expectation of USD3,500 to USD4,000 per metre squared. NMC's decision not to disclose the contractor responsible for the renovation work on the hospital "appears to be de facto controlled by BR Shetty" was also highlighted by Muddy Waters.
Muddy Waters' claims were disputed by NMC, which has previously called the allegations "unfounded, baseless and misleading".
In January, NMC called on Freeh Group International Solutions LLC, founded by former US federal judge and FBI director Louis Freeh, to "provide a completely independent, unbiased, comprehensive and transparent report that will address all of these allegations".
NMC on Monday last week separately confirmed "highly preliminary approaches" from private equity firms Kohlberg Kravis Roberts & Co and GK Investment Holding Group.
Subsequently, US-based KKR confirmed it does not intend to make an offer for NMC, while Swiss-headquartered GKSD Investment confirmed it was considering a potential offer for the company.
NMC Health closed 5.5% higher at 844.20 pence each in London on Tuesday. Their shares have taken a battering since the Muddy Waters claim, however. On December 16, the day before the allegations were made, its stock closed at 2,585.00p.
By Eric Cunha; [email protected]
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