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Two weeks after roundly rejecting an offer of five per cent equity in Etisalat Nigeria, in lieu of the more than $1 billion trade credit extended in 2013, creditor banks will now take over the telecommunication company three days from now, Friday June 23.
Etisalat Group, the parent company of Etisalat Nigeria, announced the takeover on Tuesday in a filing to the Abu Dhabi Securities Exchange in Abu Dhabi, United Arab Emirate.
The filing, signed by Serkan Okandan, the group company’s Chief Financial Officer, said efforts by Emerging Markets Telecommunications Services (EMTS) to restructure the repayment of the syndicated loan by a consortium of banks to Etisalat Nigeria collapsed.
The company is said to have commenced changes to its shareholding structure following Tuesday’s disclosure.
Services to its subscribers, some 23 million people, will not be affected by the changes, Ibrahim Dikko, vice president for regulatory affairs at Etisalat Nigeria said in a statement.
Etisalat had been in talks with Nigerian banks to restructure a $1.2 billion loan after missing repayments but those discussions failed to produce an agreement on restructuring the debt.
The company had initially asked lenders to convert the dollar portions of its loans into naira to help it overcome the shortage of hard currency on the interbank market but this was rejected by the lenders.
A number of firms invested aggressively in Nigeria in the era of high oil prices but are struggling to repay loans or keep operating, as the oil producer suffers from a slump in global crude prices that has hammered its revenues, its currency and dollar reserves.
The United Arab Emirates (UAE) owned Emerging Markets Telecommunications Services (EMTs) had in May 2013, signed a US$1.2 billion medium term syndicated loan facility with banks for its telecommunications firm, Etisalat Nigeria to refinance the existing commercial medium term debt of US$650 million and expand its network.
However, the company said it missed payments due in February 2017, as a result of economic downturn, currency devaluation and dollar shortages on the country’s interbank market. Sources say the company may have also missed payments that were due in May.
Etisalat was said to be working with its lenders and Abu Dhabi state investment fund Mubadala, the second-largest shareholder in the business, to resolve debt woes it said were caused by a devaluation of the naira currency.
The NCC interceded to get reprieve for Etisalat, scheduling a series of meetings between the telecommunications operator, the CBN and the said banks, to discuss the possibility of payment restructuring.
An Etisalat Nigeria spokesman said the company was still in discussions with lenders to find a “non-disruptive” solution.
Etisalat said its financial exposure to Etisalat Nigeria was related to operational services worth 191 million UAE dirhams ($52 million) and that discussions were ongoing with lenders regarding the use of the Etisalat brand.
LOLADE AKINMURELE
