Abu Dhabi, Feb 17: NMC Health Plc, a hospital operator targeted by short-seller Muddy Waters, said founder Bavaguthu Raghuram Shetty resigned amid investor concern he faced a margin call and misrepresented his stake.
The board asked for Co-Chairman Shetty’s resignation and it takes effect immediately, according to a person with knowledge of the situation. NMC has lost four board members since Friday, including Vice Chairman Khaleefa Butti, whose holdings are also being probed. The stock, the worst performer on the FTSE-100 Index this year, fell as much as 9.2 percent Monday morning and then rebounded.
“The resignation of senior board members should be viewed positively,” said Abdulla Nahlawi, an analyst at Rasmala Investment Bank in Dubai. “The credibility of the current board has been jeopardized with the unfolding of the recent events.”
NMC shares lost almost half their value the first week of February on speculation the company’s main investors faced a margin call, in which banks seize shares pledged as collateral. NMC said Friday that First Abu Dhabi Bank and Al Salam Bank Bahrain obtained 20 million shares in the company from BRS International Holding, an investment vehicle of NMC’s top shareholders. The banks sold more than 8 million of those shares as “enforcement of security,” NMC said.
NMC operates the largest medical network in the United Arab Emirates and in 2012 became the first Abu Dhabi company to list in London. The shares started teetering in mid-December when Muddy Waters alleged that NMC manipulated its balance sheet and inflated the prices of companies it acquired.
Shetty, 77, was born in India and founded NMC in the 1970s after moving to Abu Dhabi. His spokesman said a legal review of the situation is ongoing and declined further comment.
Chief Investment Officer Hani Buttikhi and board member Abdulrahman Basaddiq also stepped down because they were appointees of Shetty and Butti, NMC said, adding that they had no knowledge of the share transfers.
Questions remain over the role of Shetty’s family at the company. His wife and son-in-law both hold roles in senior management.
Almost 10 per cent of NMC’s freely traded shares are shorted, according to Markit Securities data. In mid-December about a third of them were.
Last week GKSD Investment, an investment company backed by hospital investors, said it’s studying a possible offer for NMC. Under U.K. takeover rules, it has until March 9 to make a bid.
NMC has said Muddy Waters’s claims are false and the company hired former FBI Director Louis Freeh to conduct an independent review. The review is due to be completed before the company issues its financial results in March, the person said.
NMC said Mark Tompkins will continue as the company’s sole chairman.
Comments
All Muslim must Vote for SDPI...we should follow our hindu ppl...how they VOTE only for BJP in mangalore ...if the cadidate is also DOG..if it is hindu then they will vote for it....in similerly we should vote for SDPI if the cadidate is CAT....vote for religion not for this country development...
D'Souza Gaddar man...what is the construbution of your community towards indian independence...you people are slave and licking boots of british...we and our hindu brother fought & die to this country...
the biggest terror is the george W bush
we all know about you people...you always spread division, curription on earth and make people fight and play innocent role...
killing people using modern weapon & black suit with tie doest not make innocent..its also terror attack..
ALL Muslim must VOTE for SDPI, we all know the capacity of congress leader...NAMARD cadidate....if we defeat also we should vote for SDPI....
from where do you get all these infos ? Pls list out the outfit names also so that we can laugh out loudly.its an open challenge for you , prove your allegations if you dare
Wow Kudos to CD team for appraove OP's opinion. Kindly ensure similair opinion about national parties will be reflected as well. Journalism must be people friendly and request CD Editor team not to biased and respected readers opinion. Thanks
SDPI ZINDABAD............ YES LET CONGRESS SUPPORT SDPI IF THEY R REALLY A SECULAR PARTY........
SDPI is political arm of PFI, which allegedly has links with several terror outfits. All those who vote for this fellow are terrorists.
Let Congress – if it is really a secular party – decide not to field candidate from Dakshina Kannada and officially support SDPI as the latter had done in many seats in last Assembly polls. All the shortlisted Cong ticket aspirants are useless, shameless and corrupt people. Let all the peace lovers back SDPI this time.
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