KGI Criticizes NMC Health for Miscommunication of Fraud Allegations to Investors

Krupa Global Investments (KGI) criticizes NMC Health management for poor communication to investors regarding serious allegations made by hedge fund Muddy Waters, blaming NMC for hidden off-balance sheet debt and several overpriced purchases of hospital facilities made in recent years. KGI representatives asked for explanation of recent allegations, but IR and management team did not respond to our calls and emails, IR and management team were not able to respond properly.

KGI, Prague-based hedge fund, have previously worked with Carl Icahn on Amtrust Financial Services, believes that NMC Health’s board of directors mismanaged this crisis around Muddy Waters (MW) report. In our opinion, MW allegations are serious, possibly true and management have not disclosed any relevant explanation for shareholders yet. In our opinion, allegations made in 35 pages long report by MW should be explained further than general and plain press release which only brought more uncertainty to shareholders. Shares of NMC Health dropped nearly 70% after MW report. Investors are clearly confused, scared and selling out NMC of their portfolios. We request from NMC following steps:

1. KGI demands step by step reportexplaining MW allegations and €200m off-balance sheet debt described in FinancialTimes few days ago. Recent press denials made by NMC are clearly not enough. We havespoken to several regular investors and these allegations are huge red flag forthem. We urge investors to question management and request answers for thispossibly fraudulent behaviour of executives and controlling shareholders of NMCHealth. If these allegations arecorrect, growth story and excellent expansion of NMC business is gone and NMCshare value should drop below £10.
2. KGI requests that NMC Board of Directors will elect independent committee from investor representatives shortly, calling special shareholder meeting if necessary. Non-executive directors who should overlook these allegations are not independent and act on behalf of board which may lead to further share decline and uncertainty. The new committee of investors will assess results of report made by third party accounting firm as mentioned by NMC. This committee would act without further pressure from management or NMC’s board of directors. We have experienced similar situation in Amtrust Financial where company used independent committee consisted of insiders to approve whole process of privatization on unfavourable conditions for shareholders. We fear that similar behaviour may occur at NMH Health.

KGI encourages other investors to join us in questioning management about these serious issues at NMC IR contact: asjad.yahya@nmc.ae