$1.2b: Banks Seek Probe Of Etisalat’s Management
The 13 banks involved in Etisalat Nigeria’s $1.2 billion loan are seeking the Federal Government’s intervention to investigate the firm’s management.
The banks plan to seek an Economic and Financial Crimes Commission (EFCC) probe of what the company did with the loan.
The source alleged that the loans were siphoned, noting that there was no proof of what the company did with the loan.
He said the affected banks had rolled out a lot of viable options to Etisalat for the loan to be restructured but was rejected by the company.
The source said that the banks were not into telecommunications and had no intention of running Etisalat, according to NAN.
“All we want is to recover the loans; we cannot write off the loans as being demanded by Etisalat because the company is viable,” the source stated.
The source said that Etisalat wanted the banks to write off the loan as non-performing, but that was rejected because the company was doing well.
According to the source, the company wanted an injection of new capital, and this had been suggested to the majority shareholder.
But the telco said its outstanding indebtedness with the consortium stood at $500milion, having paid part of the loan.
It was gathered that the telco had serviced the $1.2billion loan by more than half of the principal sum being owed its creditors since 2013 and what remained to be paid is far less the amount that is in the public space.
“The actual outstanding on the Etisalat loan is about $500millio (about N165billion). This is in view of the fact that Etisalat has efficiently serviced the $1.2billion loan up until earlier this year when discussions with the banks regarding the repayment restructuring commenced. I can confirm to you in confidence that the company has made repayment of over 50 percent of the original loan so far,” a source said.
At Etisalat’s head office on Banana Island and its annex office at the Oriental Hotel, Victoria Island, both in Lagos, workers went about their duties unhindered.
A senior management team member, who spoke on condition of anonymity, said the announcement by Emirates Telecommunications Group Company (that is The Etisalat Group) of Abu Dabhi, United Arabs Emirate to pull out of the local arm was not a sign of bankruptcy or insolvency.
”What has effectively happened is a change in ownership and not a receivership, bankruptcy or winding up so operations will continue to run and subscribers can continue to access services on the network as usual,” he said.
He allayed fears of any job loss stating that there were no plans to lay off workers. “The discussions with the banks have been on for a while and Etisalat has met its obligations to staff during this time. So long as the business continues, and from all indication, it will, the company will sustain its side of the bargain,” he added.
The senior official also assured that the company’s operations would not be disrupted in any way and that subscribers would continue to enjoy excellent customer experience on its network during and after the transition period.
The $1.2billion loan, a medium-term seven-year facility, was obtained by the telco for the purpose of expanding its network and improving the quality of service. Due to the economic downturn of 2015 and consequently sharp devaluations of the naira which negatively impacted on the dollar-denominated loan, Etisalat ran into difficulty in its repayment plan. This led the company to request the banks for a loan restructuring, a request which did not go down well with the lenders.
UAE’s Etisalat on Tuesday said it had been instructed to transfer its 45 percent stake in Etisalat Nigeria to a loan trustee.
Etisalat said it had been notified to transfer its stake by Friday. It said the stake had a carrying value of zero on its books.
In the last three months, Etisalat Nigeria has been in talks with the banks, to restructure a 1.2 billion-dollar loan, after missing repayments.
The loan is a seven-year facility, agreed with 13 banks in 2013, to refinance a 650 million dollar loan, and fund expansion of the telecommunications network.
Although the Nigerian Communications Commission (NCC), and the Central Bank of Nigeria (CBN), stepped into the fray to prevent a takeover by the banks, those discussions failed to produce an agreement on restructuring the debt.
Also yesterday, the NCC assured subscribers that the network’s integrity would not be compromised.
Its spokesman Tony Ojobo said, in a statement, that the commission’s attention had been drawn to the planned takeover by the banks.
Ojobo said the regulatory body was aware of the indebtedness of Etisalat to the consortium.
According to him, the NCC, in conjunction with the CBN, has held several meetings with the banks, Etisalat and other stakeholders to find a solution.
“Regrettably, these meetings did not yield the desired results.
“The NCC wishes to reassure about 21 million Etisalat subscribers that it will do all within its regulatory power to ensure that Etisalat subscribers continue to enjoy the services provided by the operator.
“The commission has taken proactive steps to cushion the impact of the takeover; this is without prejudice to the ongoing effort between Etisalat and the banks toward a negotiated settlement.
“NCC wishes to reassure all stakeholders in the telecommunications sector, in particular, the subscribers on the Etisalat network, that it will ensure that the integrity of the network is not compromised.’’
The statement said the commission had drawn the attention of the banks to provisions of the Nigerian Communications Act (NCA) 2003 Section 38: Sub-sections 1 and 2.
“Subsection 1 says: The grant of a license shall be personal to the licensee.
“The licence shall not be operated by, assigned, sublicensed or transferred to another party unless the prior written approval of the commission has been granted;
“Subsection 2 says: A licensee shall at all times comply by the terms and condition of the license and the provision of this Act and its subsidiary legislation,’’ it said.
The director said while the banks and Etisalat were working at resolving the issues, the commission assured that subscribers would continue to enjoy the services provided by the telecommunications company.