Banks reject Etisalat’s $58.9m payment plan


Twelve commercial banks have rejected a $58.9 million offer by Etisalat Nigeria as full and final payment for the $588.6 million the telecom giant owes, The Nation learnt yesterday.
The loan comprises N114 billion ($361.6 million) in local currency and $227 million in foreign currency, putting the total obligation to the banks at $588.6 million. The source said Etisalat Nigeria also has some unsettled obligations to its other business partners.
A senior manager in one of the banks told The Nation that the lender rejected the offer because it was not a fair deal, which will hurt the interest of shareholders, deplete their capital base and derail the stability in the banking sector.

The source said Etisalat Nigeria came up with the repayment plan after an emergency meeting held between the lenders and the telecom giant last month in London.
After the meeting, Etisalat Nigeria came up with the loan liquidation plan, which the banks rejected.
The banks had decided to cut the interest charged on the loan by six per cent below market rate, agreed to absorb 20 to 30 per cent of the debt burden and allow the firm to pay-down the loan within eight years.

The source, who pleaded not to be named because he is not permitted to talk on the matter, explained that the banks remained entrepreneurs and custodians of depositors’ funds, which they must protect.
The source said: “It is a challenging time for the banks. A lot of Nigerians depend on us as depositors. We have shareholders who have invested in the banks and want dividends. Etisalat has the capacity to repay the loans. Etisalat flew their private jet to Nigeria from United Arab Emirates and obtained its operating licence without borrowing from any bank.  They are heavy guys, and can pay their debt.”
“The firm has a strong parent company who is one of the best investors in the world.”
The source said that these credentials convinced the lenders to lend to Etisalat Nigeria. “Even though we cannot see all the benefits, but the telecom sector contributes about eight per cent to the national Gross Domestic Product, and the banks saw the need to support the company.
“The country cannot have the Smart City being canvassed without the telecom sector. We gave out the loans to support the economy,” the source said.

According to the source, the loan to the company was restructured, with the borrower given additional time to ensure it liquidates the loan, but while the final document for the loan restructuring was being reviewed by the Legal Council, the company asked for a ‘Stand Still’.
The source said the banks were not questioning the capacity of Etisalat Nigeria to liquidate the loan, but what is lacking is the company’s willingness to pay back the loan.
The source said the banks had not taken over the company, because they do not own shares in the company, the directors are not changed and the lenders do not have expertise in running telcos.
Etisalat Nigeria yesterday denied reports that it was being investigated by the Economic and Financial Crimes Commission (EFCC), following a petition to “the Federal Government asking that Etisalat be investigated” on how the funds from the syndicated loans were utilized.

In a statement, its Vice President, Regulatory & Corporate Affairs,  Ibrahim Dikko, said: “Etisalat wishes to categorically affirm for the avoidance of doubt that the reports are patently false and most unfortunate, considering the damage such misleading information can have not only on our business, but indeed on the telecommunications industry and the country as a whole.
“Concerned parties have access to our books and do not require an investigation into how the loan sum was utilised. All of the infrastructure investment and services for which the loan was secured, were paid through our banks and these are verifiable,” he said.
Banks reject Etisalat’s $58.9m payment plan Banks reject Etisalat’s $58.9m payment plan Reviewed by Nene Sochi-Okereke on Friday, 23 June 2017 Rating: 5

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