A consortium of Nigerian banks, led by Access Bank Plc and foreign banks, has taken over the management of Etisalat Nigeria, following the inability of the telecoms company to meet up with its debt obligations.
The takeover, which came into effect on June 15, has been confirmed by Mr. Ibrahim Dikko, vice president, Regulatory & Corporate Affairs, Etisalat Nigeria.
The development followed the collapse of efforts by Emerging Markets Telecommunications Services to reach an agreement with the banks on debt restructuring plan in the protracted $1.72 billion (about N541.8 billion) debt.
EMTS is promoted by a well-known corporate player, Hakeem Bello-Osagie, who held majority stake in UBA Plc before it was bought over by the legacy Standard Trust Bank, then under the management of another corporate guru, Tony Elumelu.
Etisalat Nigeria had in 2013 obtained a seven-year loan facility of $1.2billion from 13 local banks and their foreign counterparts to refinance a $650 million loan as well as the expansion of its network.
No thanks to the predicament of the Nigerian currency, the company had missed the payment due to dollar shortfall in Nigeria’s financial system.
The loan, which involved a foreign-backed guaranty bond, was for Etisalat to finance a major network rehabilitation and expansion of its operational base in Nigeria.
The 13 local banks involved in the loan deal include: Zenith Bank, GT Bank, First Bank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank, and Union Bank.
Reports however indicate that EMTS Holding BV, established in the Netherlands, has up to June 23 to complete the transfer of 100 percent of the company’s shares in Etisalat to the United Capital Trustees Limited, the legal representative of the consortium of banks.
Etisalat Group, the parent company of Etisalat Nigeria, announced the takeover on Tuesday in a filing to Abu Dhabi Securities Exchange in Abu Dhabi, United Arab Emirates
The filing in letter No. Ho/GCFO/152/85 dated June 20, 2017, signed by Serkan Okandan, Etisalat Group Chief Financial Officer, said efforts by EMTS to restructure the repayment of the syndicated loan by a consortium of banks to Etisalat Nigeria collapsed.
“Further to our announcement dated 12 February, 2017, Emirates Telecommunications Group Company PJSC, “Etisalat Group” would like to inform you that Emerging Markets Telecommunications Services Limited “EMTS” (“the company), established in Nigeria and an associate of Etisalat Group with effective ownership of 45% and 25% ordinary and preference shares respectively, defaulted on a facility agreement with a syndicate of Nigerian banks (“EMTS Lenders”).
“Subsequently, discussions between EMTS and the EMTS Lenders did not produce an agreement on a debt restructuring plan.
“Accordingly, the Company received a default and security Enforcement Notice on 9 June 2017 requesting EMTS Holding BV (EMTS BV) established in the Netherlands, and through which Etisalat Group holds its interest in the company) requiring EMTS BV to transfer 100% of its shares in the company to the United Capital Trustees Limited (the Security Trustee”) of the EMTS Lenders by 15 June 2017.
“Subsequently the EMTS Lenders extended the deadline for the share transfer to 5.00 pm Lagos time on 23 June 2017,” the filing said.
Etisalat has been under pressure since 2016, follow the demand notice for the recovery of a $1.72 billion (about N541.8 billion) loan facility it obtained from a consortium of banks in 2015.
The loan, which involved a foreign-backed guaranty bond, was for the mobile telephone operator to finance a major network rehabilitation and expansion of its operational base in Nigeria.
Unable to meet its debt servicing obligations agreed since 2016, the consortium, prodded by their foreign partners, threaten to take over the company and its assets across the country.
But, the intervention of the telecom sector regulator, Nigerian Communications Commission (NCC), and its financial sector counterpart, the Central Bank of Nigeria (CBN), succeeded in persuading the banks to rethink their threat and give Etisalat a chance to renegotiate the loan’s repayment schedule.
Confirming the development in a press statement: “Bank Loans: Etisalat Nigeria Confirms Changes in Shareholding Structure”, Mr. Ibrahim Dikko, vice president, Regulatory & Corporate Affairs, Etisalat Nigeria, said that the development is the first stage a change in shareholding which was announced to the Abu Dhabi Stock Exchange this morning.
He said, “Etisalat Nigeria can confirm discussions are on-going regarding other issues such as the trading name during this transition phase. Operations and services to our subscribers remain normal and will in no way be affected as we continue to deliver quality services to our subscribers. We will continue to tap into the rich, creative and innovative resources within our workforce to build a stronger business upon the stable foundation we have laid in our 9 years of operations.
“Etisalat Nigeria wishes to express its profound gratitude to the Government, the Nigerian Communications Commission, (NCC) and the Central Bank of Nigeria for their patriotic zeal and tireless efforts at ensuring collaborative and productive engagement.
“We are also appreciative of the tremendous support we have received from the media since inception and we count on their continued support as we transition to a stronger business. We will update our stakeholders and the public on further developments shortly.
