|
Getting your Trinity Audio player ready...
|
BusinessDay’s findings have shown that since the takeover of Arik Air by the Asset Management Corporation of Nigeria (AMCON), investors who had shown interest in the airline have declined after discovering huge debt profile against its assets.
The situation has become more urgent for the airline and AMCON as the corporation last week disclosed plans to take decisive decision by selling off all its key assets this year.
Recall that the Federal Government, through AMCON in February 2017 took over the operations of Arik Air as a result of its huge debt.
It was gathered that the beleaguered airline was indebted to the tune of over N300bn, with AMCON alone owed N135bn; while its obligations to aviation fuel suppliers, insurance firms, aircraft maintenance organisations, the Federal Government and the various aviation agencies, as well as food vendors made up the balance.
A source at AMCON told BusinessDay that Joseph Arumemi-Ikhide, the former chairman of Arik Air had held several meetings and negotiations with interested investors to buy into the airline but the investors have been overwhelmed by the airline’s huge debt burdens.
The sources explained that Ikhide is making all efforts to get investors to pay off the huge loan so he can still have a stake in the airline because if AMCON brings in an investor, Ikhide will have no stake in it.
“Since the time AMCON took over, Ikhide has been coming to negotiate. He said we should allow him get some foreign investors who will come and pay our debt so he can partner with them to take back Arik Air. We do not care where he gets the money from. Government said we should ensure Arik does not die because it is very strategic to Nigeria.
“Again the debt must be paid because it is depositors’ funds AMCON borrowed from the Central Bank of Nigeria (CBN) to buy these loans. So, the challenge Ikhide is having is that when a new investor comes, they discover that the debts are very huge. This has scared a lot of them away. When they see the kind of money they will pay, they get discouraged,” the source explained.
“We are not interested in him not having back his airline. We just want him to pay the money and keep the airline alive. We want to have a very peaceful exit that will not wreck the activities of the airline,” the source added.
John Ojikutu, member of aviation industry think tank group, Aviation Round Table (ART) and Chief Executive of Centurion Securities, told BusinessDay that Arik today may not be worth N200bn and that explains the reason why the new buyers would probably pay less. That also explained why AMCON is tired and wants to sign off by next year.
“Arik was almost a dead horse by the time AMCON came with life support to rescue it. It was evident to some of us that the airline would stay longer than 30 years under that support for AMCON to recover at least N10bn every year. In spite of the new aircraft in Arik fleet, not all are owned by Arik or fully paid for. That would have helped AMCON to determine the real value of Arik against the debt of over N300bn, and that is what the new buyers are seeing.
“There seem to me that there is a complicity of the banks and AMCON itself in the loan facilities otherwise how or why would they not have detected that the various loans given to the airline within 2 years into its operations had no collateral except political forces behind the ownership of the airline,” Ojikutu queried.
He said the Nigeria Civil Aviation Authority, (NCAA) too would share in the blame because it did not ensure that the airline complied with the provision of the Nigeria’s Civil Aviation Regulations, (CARs) Part 18 that requires all operators to submit regularly the monthly balance sheet of its earnings and spending to ensure its financial health is sufficient for its continuous operations.
He stressed that if these checks were done by the banks, AMCON and NCAA, there was no way the airline would have incurred debt of N300bn within 5 years of its operations.
