Lenders to Shetty’s pharma firm are said to start debt talks

Lenders to Neopharma, the pharmaceuticals business founded by Bavaguthu Raghuram Shetty, are set to kick off talks to restructure Dhs1bn ($272m) of debt, according to people with knowledge of the matter.

Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates Islamic Bank, India’s Bank of Baroda and Bahrain’s First Energy Bank will meet on Thursday to discuss a proposal to restructure the debt, the people said, asking not to be identified because the talks are private.

Creditors will also consider plans to bring in a new strategic investor to Neopharma to keep the business operating, the people said.

Abu Dhabi-based Neopharma, which is linked to NMC Health through Shetty, has been pulled into the scandal surrounding the embattled hospital operator.

A report by short seller Muddy Waters Capital alleged that NMC had overpaid for assets, inflated cash balances and understated debt. NMC is being run by administrators Alvarez & Marsal Inc. after more than $4bn of undisclosed borrowings were discovered.

Shetty last month said a preliminary investigation into NMC and his currency-exchange business Finablr by his advisers indicated “serious fraud and wrongdoing.”

He said bank accounts were fraudulently created and operated, and that loans, personal guarantees and cheques had been created in his name without his knowledge.

Brink of Collapse
Shetty established Neopharma in 2003 and was weighing an initial public offering of the business last year before fraud allegations forced NMC into administration and pushed Finablr to the brink of collapse.

The Indian entrepreneur more recently had been considering selling Neopharma in a deal that would have valued the company at between $700m and $1bn before his business empire started unraveling, people with knowledge of the matter said in March.

A spokesman for Neopharma confirmed Thursday’s meeting, but declined to comment further.

Representatives for Emirates Islamic Bank, DIB and First Energy Bank declined to comment.

ADCB, ADIB and Bank of Baroda didn’t immediately respond to requests for comment.

Neopharma operates in about 50 countries in the Middle East, Africa and Asia and owns 10 production facilities. In recent years, it signed a number of manufacturing partnerships with international pharmaceutical companies such as Pfizer Inc., according to its website.