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  "documentTitle": "NMC Health plc (NMC.LN)",
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  "authorName": "Carson C. Block",
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  "presentationDate": "2019-12-17 00:00:00",
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  "notes": "This is a research note page focusing on forensic accounting and investigative findings regarding undisclosed debt.",
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      "text": "If there is one simple way of showing what a mess NMC's financials could be, it is the failure to disclose over $350 million of operating lease commitments prior to H1 2019.",
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      "text": "When searching online, we found a $105 million three-year facility arranged by First Energy Bank. Khalifa Bin Butti became chairman of this bank in May 2016. In a salacious coincidence, Mr. Bin Butti replaced Khadem al-Qubaisi, who was arrested for his role in the “Billion Dollar Whale” / 1MDB / Jho Low scandal.37 NMC made no disclosure or announcement of this facility, which we see as unusual based on its history.",
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      "text": "Assuming that the Reverse Factoring is not in short-term borrowings, it appears the $190.4 million balance as of H1 2019 could largely be overdrafts. At least that was the implication of statements by Mr. Yahya, who reiterated that this balance is “overdrafts, et cetera” multiple times. He stated that the company had never drawn on its $400 million revolver. This would be a staggering overdrafts balance to run, particularly given the purported cash. A partial answer could be provided by an $80 million short-term facility we found that was arranged by Kuwait International Bank and Warba Bank. However, there was no disclosure or announcement by NMC of this facility, which we believe is unusual. If the Kuwait International / Warba facility is not included in S-T Borrowings, we are truly perplexed. Regardless, any eight or nine figure overdrafts balance would be shocking, particularly given NMC’s reported cash balances. In any event, we never received a response to our request for further detail on the short-term borrowings.",
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      "text": "As we outline in this report, we have numerous concerns about the integrity of NMC’s financial statements. If there is one simple way of showing what a mess NMC’s financials could be, it is the failure to disclose over $350 million of operating lease commitments prior to H1 2019. In the H1 2019 report, NMC disclosed that it suddenly found $352.2 million of operating lease commitments it had previously failed to disclose. This amount represents over 12% of NMC’s reported debt total inclusive of leases, and the failure to previously disclose it is, in our view, a massive red flag. We find it implausible that any LSE issuer could overlook such a large lease liability, and therefore, we think NMC likely intentionally omitted the disclosure in prior periods.",
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      "text": "In recent weeks, the web page on the bank’s site announcing this facility has gone into the Memory Hole. (Fortunately, we still have a copy.) Given the lack of disclosure, close relationship, and possible coverup attempt, we wonder whether this facility is on the balance sheet. It is not shown in Bloomberg’s debt table. We recognize that Bloomberg might not have all issuances; but, the facts surrounding this facility give rise to several questions, and yet the company ceased engaging with us as we sought to reconcile to its reported debt.",
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      "text": "37 http://www.aleqt.com/2016/08/24/article_1080364.html",
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      "kind": "title",
      "text": "NMC Understated Aspen-Related Debt by Approximately $320 Million in FY 2018 and Likely Continues to Do So",
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      "text": "Where our Doubts about NMC’s Reported Debt Balances Start",
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