KUALA LUMPUR: IHH Healthcare Bhd is looking to further reduce its non-Turkish lira foreign currency debt for its 90%-owned subsidiary Acibadem to mitigate the overall effects of foreign currency fluctuations on the group.
“Of the remaining US$420mil non-Turkish lira borrowings, we are looking to refinance another US$250mil with a view to swap at least half or more of this into lira (debt) to reduce non-Turkish lira exposure.
“This means we would like to convert the foreign currency loans into local borrowings (in terms of the Turkish lira).
“This will be done in stages within this year,” IHH chief financial officer Low Soon Teck said yesterday after its AGM.
“With the smaller foreign currency loans, we are less exposed in terms of Turkish lira exposure. In addition to this, the group is conserving the foreign currency cash that we receive from our foreign patients (in Turkey) to pay down more of the debt,” Low added.
Asked if the group will retire the whole non-Turkish lira debt for the Acibadem subsidiary, Low said that this would not be tenable.
“On a practical level it is going to be quite difficult because some of these debts are for leasing equipment so there will be a residual amount.
“There will still be some lira debts that are required for working capital. But certainly we will be working to reduce the non-Turkish lira portion (of Acibadem’s debts),” he said.
He expects that Acibadem’s non-Turkish lira debts which currently stood at US$420mil would soon come down to US$300mil or less.
“We will certainly try to reduce it through the accumulation of cash as much as possible,” Low said.
IHH meanwhile also said it is supportive of the government's efforts to rein in medical inflation.
However, it believes that it is crucial to enact policies that holistically address the issue by considering the healthcare financing structure and its various stakeholders, and not focus strictly on drug price controls per se.
IHH also said it remains fully aligned with Association of Private Hospitals Malaysia’s call and efforts to continue collaborative engagement with the authorities and broader stakeholders to ensure an effective solution to tackle medical inflation in Malaysia.
Dr Tan also said he was unable to reveal the definite profit margin of its hospital’s drug division or IHH’s pharmaceutical division because certain more complex procedures using the same drugs required more technical expertise and care to administer.
“It is very difficult for me to comment because of the nature of drugs used is very different with the ways we dispense it. But we believe that with the benchmarks we have and also working with the different insurance companies, there are enough systems of check and balances. The Health Ministry’s moves provide a very solid framework for us to work together,” Tan said.
IHH is the owner and operator of the Pantai and Gleneagles private hospitals in Malaysia.
On Monday, IHH also announced the retirement of Tan from the group upon the completion of his contract period on Dec 31, 2019.
Tan who had been with IHH for 15 years had led the successful dual public listing of IHH back in 2012.
He will be succeeded by Dr Kelvin Loh from Jan 1, 2020.
(An earlier version of this story reported that IHH is supportive of the government's moves to impose a price control for drugs. Upon clarification from IHH, that has now been updated / corrected to state that IHH is instead supportive of the government's efforts to rein in medical inflation.)