The turmoil at private clinic operator Healthway Medical Corp (HMC) is coming to a head.
Not only has the Singapore Exchange (SGX) directed HMC to go back to shareholders to get their approval before drawing down on a controversial loan, but the firm's clinics also appear to be falling into disarray.
Checks by The Straits Times showed that no doctors turned up for work at seven of its family clinics yesterday. According to the clinics' receptionists, this was because certain anchor doctors fell ill and no locum doctors could be found to take their place.
At Healthway's Holland Drive clinic, a receptionist said over the phone that no doctor would be on duty this week, until the anchor doctor comes back next Tuesday.
The Holland Avenue branch is closed till tomorrow evening, as both regular doctors are on medical leave. A woman who picked up the phone at its Serangoon clinic said the clinic would be open till midnight, "but there is no doctor. We tried to find a relief doctor since last week, but there was no one".
In a weekend announcement, HMC disclosed that it had not paid the salaries of its doctors and senior management, amounting to $3.9 million, for last month.
The company had started to fall behind on payments even earlier, claimed a doctor who works for the group. The doctor, who declined to be named, said: "Doctors don't live hand to mouth. If they fold, they fold. I can work somewhere else."
Asked how it was handling the situation, HMC said: "We have, and manage, over 120 full-time doctors... Locums are in short supply due to the school holidays. On the other hand, our specialist and dentist clinics were relatively crowded today."
HMC, one of Singapore's largest private clinic operators with close to 50 family clinics, is in a liquidity crunch after losing millions of dollars in questionable loans to two entities. The SGX has called for an independent review of these loans.
HMC had a cash balance of just $527,000 at the end of last year against trade and other payables of $27.7 million. It needs $10.7 million to settle overdue payroll and debt obligations by March 31.
HMC also has some egg on its face now after an onerous $70 million convertible bond deal it inked in January with a fund called Gateway raised SGX's eyebrows and an outcry from minority shareholders.
The bonds would be secured on the shares of all HMC group companies, meaning a default would result in a loss of HMC's entire core business. Gateway would also be transferred a controlling interest in HMC as part of the bond issuance. One day before the notes were set to be issued, SGX made a rare move to step in. It told HMC the issuance must be put to a shareholder vote in compliance with Catalist listing rules.
HMC added in the weekend update that it has re-entered discussions with Gateway to consider alternative proposals.
Gateway told The Straits Times: "Any new proposal will take into account the issues raised by SGX.
"Given the very weak financial health of the company, no responsible lender would give money without tight controls on the company and on how the money was used."
If a shareholder meeting is held to vote on the Gateway deal, it is not certain how the votes will swing.
Healthcare assets in ageing Singapore never fail to draw keen interest from investors, and Indonesian conglomerate Lippo, controlled by the Riady family, has made a rival offer to take over HMC. Lippo had accumulated a 20.53 per cent stake in HMC as of yesterday.
HMC's next largest shareholder is former long-time executive chairman Fan Kow Hin, with a 17 per cent stake. Mr Fan filed a bankruptcy application last week with stated debts of $166.6 million. He is said to favour Gateway.