The group of 13 banks being owed by Etisalat Nigeria has roundly rejected an offer of five per cent equity in the telecommunications firm in lieu of the more than one $1billion trade credit extended in 2013, according to BusinessDay investigatioins.
The equity offer was made in a communication to the banks late on Friday and the shocked banks are now plotting to make
good their threat to take over the company after talks failed to refinance the debt.
One CEO whose bank is owed described the equity offer as irresponsible saying, “we always knew it will come to this
and we are prepared for it.”
The banks are particularly angry because according to one of them, when Nigeria’s telecommunications firms sold their base stations to IHS someyears ago, they used the proceeds to offset their bank loans and debts owed to suppliers but Etisalat abandoned its creditors.
The bank CEO said apart from the banks, the telecommunications firm is still owing suppliers as well.
Many of the banks told BusinessDay at the weekend, that they have lost their patience, especially after the Abu Dhabi based parent company of Etisalat and its Nigerian partners failed on their promise to settle about $500 million of the debt.
According to one bank CEO, “we had given Etisalat benefit of the doubt, treating them as you will treat a multinational but now we know better. We are learning from the bitter experience which Standard Chartered Bank had in its dealings with Etisalat in Tanzania and India and it was not good.”
BusinessDay learnt that it is unlikely either the Nigerian Communications Commission (NCC) or the Central Bank of Nigeria (CBN) will stop the take over because it will set a dangerous precedent.
According to another bank CEO, “we seek to make it clear that we are not interested in becoming a telecommunications
company and so what ever action we take, the intention is to recover the money owed. Telecommunications is an international
business and we should be able to attract new shareholders for the business.”
He said the plan is to “take over the management of the company, with the subscriber base of Etisalat we should be able to invite new shareholders with cash into the business and once our debt is settled, we will get out.”
The Nigerian arm of Abu Dhabi telecom group, Etisalat had met the lenders in London recently for talks on restructuring the $1.2 billion medium term facility it signed in 2013 with 13 banks to fund its modernisation.
A source said Etisalat, with over 23 million subscribers on its network, 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.
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.
In a statement made available to BusinessDay earlier in the year, Tony Ojobo, Director, Public Affairs, NCC, said; “banks
and the mobile network operator agreed to concrete actions that will bring all parties closest to a resolution.”
But BusinessDay sources at Etisalat later confirmed that the issue was yet to be resolved.
“Etisalat has suggested different solutions, including converting the loans to naira but we have told the banks that we would
not pay the loan at the current rate of naira to dollar exchange which is just too high. Meetings are still ongoing, and for now, we have no idea how it is going to be resolved,” Our source had said.
BusinessDay also understands that the parent company of Etisalat had been in the country in the last one month, trying to resolve the telecom firm’s debt crisis. They had meetings with the NCC, the CBN and the banks and Nigerian shareholders of the telecom firm but apparently the meetings have not been able to broker a deal suitable to the banks, hence the latest move.
OUR REPORTER
