Alliance Medical needs an immediate cash injection of up to £150 million to stave off possible bankruptcy.
The Times has learnt that Dubai International Capital, which bought Britain’s biggest independent provider of MRI scans to the NHS in 2006 for £600 million, is in negotiations with its lending syndicate to pay the money before a deadline arrives next month.
If the sovereign wealth fund fails to pay up, Alliance Medical’s banks will have the right to take control of the business, which is at risk of breaching its banking covenants.
A spokesman for Alliance Medical said: “We are having regular and constructive discussions with our lenders around the funding of our growth. Dubai International and our other stakeholders continue to be supportive of Alliance and its plans.”
The company’s woes add to the financial problems plaguing DIC, which is in negotiations with lenders to refinance its $2.5 billion (£1.7 billion) debt mountain — talks that depend on the support of Dubai’s oil-rich neighbour Abu Dhabi. Dubai International has until the middle of next month to reach a deal with the lenders, which are being advised by Deloitte.
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The fund is in the process of restructuring its heavily indebted British portfolio, which includes a stake in Merlin Entertainments, the owner of Madame Tussauds, and the manufacturing giant Doncasters. It emerged yesterday that DIC is set to sell its minority stake in Merlin.
Alliance Medical is the latest in a line of portfolio companies to have forced DIC into rescue negotiations. Lenders to Alliance Medical, which include the hedge fund Och-Ziff, are being advised by the American investment bank Houlihan Lokey. Dubai International is advised by Blackstone Group.
The fund is also facing a fight over its biggest investment, Almatis, a German aluminium manufacturer. An American court will decide next month whether Dubai International is entitled to inject extra cash into Almatis, which has $1 billion of debt, or whether its lender Oaktree Capital can take control of the business.
DIC was also forced to put £53 million of extra cash into Doncasters, its £700 million Sheffield-based engineering business, last year in order to prevent a breach of banking covenants. The wealth fund came to a deal with its banks to put the cash into Doncasters, which employs nearly 5,000 people, in return for an agreement with lenders to relax its covenants.
A $1.2 billion loan is due next month. Lenders including HSBC are expected to push for the fund to sell its assets to raise the money.
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Dubai International is unlikely to be bailed out by the Dubai Government, which is facing its own debt crisis.
In 2009, Dubai World, the state-owned conglomerate, caused chaos when it admitted it was unable to repay its debts. Abu Dhabi was forced to step in with $20 billion of bailout loans.
Dubai Holding, the parent company of DIC, of is controlled by Sheikh Mohammed bin Rashid al-Maktoum, the emirate’s ruler, and the fund’s woes will increase market unease about the financial stability of Dubai’s debtladen state-owned businesses.
DIC nearly bought Liverpool Football Club in 2006 — it was eventually sold to the American businessmen George Gillett and Tom Hicks — and has been constantly linked with a bid for the club since.
Last month David Moores, the former Liverpool FC chairman, told The Times: “We may have had a lucky escape there, as Dubai is not the buoyant market it was in 2007.”
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DIC declined to comment.
Dubai spending spree
£700m Doncasters (manufacturing) 2006
£675m Travelodge (hotel group) 2006
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£600m Alliance Medical (health) 2007
$1.2bn Almatis (US, German manufacturing) 2007
€850m Mauser (German packaging) 2007