Moody’s cuts NMC, will withdraw ratings

Moody’s Investors Service said it downgraded NMC Health plc’s corporate family rating to Caa1 from Ba2 and the company’s probability of default rating to Caa1-PD from Ba2-PD. Moody’s also downgraded the rating of the $400 million of dollar-denominated trust certificates, or sukuks, of NMC Healthcare Sukuk Ltd. due 2023 to Caa1 from Ba2 and kept all ratings under review for downgrade. Moody’s will subsequently withdraw all ratings.

“The downgrade to Caa1 reflects a deepening of the governance shortfalls affecting the company. The recent removal of the CEO, absence of the CFO and suspension of a member of the treasury team points to significant weaknesses in terms of oversight, financial management and operational controls,” the agency said in a press release.

On Wednesday, NMC announced the independent review advisors identified supply chain financing arrangements which were used by entities controlled by Dr. B.R. Shetty and Khaleefa Butti Omair Yousif Al Muhairi and guaranteed by NMC. The company didn’t disclose the arrangements in its financial statements as required by the listing rules and they weren’t disclosed to or approved by the board. According to the announcement, the drawdown on the facilities was about $335 million as of Dec 31, which Moody’s considers a material amount.

Moody’s will withdraw all NMC ratings because it no longer trusts the company’s audited financial statements and there is uncertainty around the company’s leverage, cash position and liquidity profile. In addition, the review advisors identified potential discrepancies and inconsistencies in NMC’s bank statements and ledger entries.

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