Muddy Waters founder calls new NMC Health debt 'a massive fraud' - Arabianbusiness

Muddy Waters founder calls new NMC Health debt 'a massive fraud' - Arabianbusiness:

NMC Health uncovered $2.7 billion of debt hidden from its board that was used for unknown purposes, tipping the troubled Middle Eastern hospital operator into a full-blown accounting scandal.

The company, which until recently traded in the FTSE 100, is trying to establish the exact “nature and quantum” of the debt facilities, but some of the money may have been used for unauthorized purposes, NMC said late Tuesday. The discovery more than doubles NMC’s borrowings to around $5 billion, up from the $2.1 billion that was disclosed in June.

The revelations deal a hammer blow to the Abu Dhabi-based hospital chain, which has been in free fall since December, when short seller Muddy Waters Capital alleged that NMC overpaid for assets, inflated cash balances and understated debt. The debt disclosures heap fuel on concerns that arose when an investigation found the board was unaware of borrowing arrangements involving NMC’s founder and its former vice chairman.

The discovery that NMC “has at least $2.7 billion in undisclosed debt and no cash, it is no longer just a fraud. It is a massive fraud,” Muddy Waters founder Carson Block said in an emailed statement.