Troubled healthcare business NMC Health today said it had removed its chief executive with immediate effect and delayed its financial results.
In December, shortseller Muddy Waters said it had placed a bet against the company and questioned its financial statement and accounting policies.
Following close of trading today, NMC said that an ongoing review had discovered supply chain financing facilities entered into the company without the knowledge of its board.
It said these were used by entities controlled by founder, Indian billionaire B.R. Shetty, and NMC’s former vice chair Khaleefa Butti Omair Yousif Ahmed Al Muhairi.
It said suppliers to companies owned by the pair were paid by credit facility providers and, while those companies are responsible for settling the amounts payable to the credit facility providers, the contractual obligation rests with NMC, which has also provided a guarantee in the event of non-payment or default.
It said the draw-down on the facilities was $335m (£260m) at 31 December.
It said the current draw-down was “subject to ongoing verification” but said the facilities would no longer be available for supplier financing.
“These arrangements were not disclosed to, or approved by, the board and were not disclosed as related party transactions in accordance with the listing rules,” the company said.
It said the facilities were not reflected on its balance sheet, or reported in its 2018 financial statement.
The company said chief executive Prasanth Manghat had been removed with immediate effect and finance chief Prashanth Shenoy had been placed on extended sick leave.
It said chief operating officer Michael Davis was taking over as interim chief executive.
NMC said the ongoing review meant it does not expect to be in a position to publish its 2019 full-year results before the end of April.
It also said the review had identified “potential discrepancies and inconsistencies in the company’s bank statements and ledger entries” which it said it was working to establish if they were material.
Muddy Waters boss Carson Block said: “At this point, the company’s announcements speak for themselves and seem to be even more damning than our initial report was.”
NMC shares were trading at 2,585p in mid-December and closed today at 938p before the company’s announcement.