Etisalat, biggest victim of recession taken over by Access Bank

A consortium of banks led by Access Bank PLC have taken over the Etisalat Nigeria, one of the telecommunication company in the country.

The take over which took effect on June 15 is the fall out of an impasse over a $1.72 billion (about N541.8 billion) debt, owed by the company.

The takeover came after the effort by Emerging Markets Telecommunications Services (EMT), sponsored by a former chairman, United Bank for Africa, UBA, Hakeem Bello-Osagie in the matter, failed to yield any meaningful result.

A foreign investor, Mubadala, the second-biggest shareholder in the firm finally pulled out of the business, giveing room for the consortium of creditor- banks, led by Access Bank to announce their take over of the telecom firm, which could not settle to restructure the $1.2 billion debt that the company owed since 2013.

Prior to the take over of the company by the bank, talks initiated by the regulator, the Nigerian Communication Commission (NCC), in collaboration with the Central Bank of Nigeria (CBN) did not yield any result as the foreign and local investors failed to agree on the best way to attract fresh investment for the company.

The takeover was made public on Tuesday by Etisalat Group, the parent company of Etisalat Nigeria, in a filing to the Abu Dhabi Securities Exchange in Abu Dhabi, United Arab Emirate.

In the filing, signed by Etisalat Group Chief Financial Officer, Serkan Okandan, with reference number Ho/GCFO/152/85, and dated June 20, 2017, he said that all attempts by EMTS to restructure the repayment of the syndicated loan by a consortium of banks to Etisalat Nigeria collapsed.

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The filing read, “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 per cent and 25 per cent 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.”

“Etisalat has become the biggest foreign-owned victim of dollar shortages plaguing Nigeria’s financial system, because of lower oil prices and economic recession, leaving it struggling to make the loan repayments impossible,” said an investment expert, Mike Dulue .

It was gathered that the loan, which has proved so troubling for Etisalat Nigeria is a seven-year facility agreed with 13 local banks in 2013 to refinance a $650 million loan and fund expansion of its network, with other facilities making it up to the current amount $1.2 billion.

UAE’s Etisalat, with a 45 percent stake in the Nigerian arm, on Tuesday said it had been ordered to transfer its shares to a loan trustee by June 23, after negotiations failed.

Ibrahim Dikko, vice president, Regulatory Affairs at Etisalat Nigeria said management would continue to run the business after the shareholding changes and that there were contractual and regulator issues to be sorted out later.

He said the lenders, under pressure to avoid loan-loss provisions, have been pushing to finalise restructuring before half-yearly audits this month.

Sources say Etisalat International which generates about 3.7 per cent of its revenue from the Nigerian business, had questioned the rationale of investing more in the local unit, when asked by lenders to recapitalise its affiliate as an option.

Etisalat Nigeria has 20 million subscribers, according to NCC, making it the country’s number four mobile operator with a 14 per cent market share. South Africa’s MTN has 47 percent, Globacom 20 percent and Airtel – a subsidiary of India’s Bharti Airtel – 19 percent.

 

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