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Tuesday , 21 November 2017

Senate probes Etisalat’s $1.2bn debt crisis

The Senate on Tuesday began an investigation of the crisis between Etisalat and 13 Nigerians banks over a loan facility amounting to $1.2bn. It warned that the crisis, if not well managed, could cause problems in the banking sector.

The probe was based on the adoption of a motion by Senator Olamilekan Adeola (Lagos-West) at the plenary on Tuesday titled, ‘The Need for Senate’s Intervention in the Recent Etisalat (Nigeria) $1.2bn Debt Crisis.’

Prayers of the motion, which were unanimously granted by the lawmakers, include to mandate the Committees on Banking, Insurance and Other Financial Institutions; Communications; Capital Market; and National Security and Intelligence “to investigate the management and utilisation of the $1.2bn loan facility obtained from the 13 Nigerian banks.”

The lawmakers also mandated the above joint committee “to make recommendations on ways the Nigeria Financial Governance Structure can be strengthened by legislation to prevent any future similar reoccurrence.”

They also “urge the relevant financial intelligence agencies of the Federal Government to investigate the management of Etisalat Nigeria and hold the defaulting parties accountable for their actions.”

Adeola, in the motion, said the Senate noted that Etisalat Nigeria, a telecommunication company operating in Nigeria, had in recent times “been in the public eye over it’s $1.2bn loan crisis.”

The lawmaker said all UAE shareholders of Etisalat Nigeria, including state-owned investment fund, Mubadala, had exited the company, coupled with the resignation of top key management officers of the company: the Chief Executive Officer, Mr. Matthew Willsher; Chief Financial Officer, Mr. Wole Obasunloye; Director and the 3rd Shareholder/Partner, Mr. Hakeem Belo-Osagie.

He added, “The Senate regrets that although it should ordinarily not be the duty of the Senate to wade into individual debt crisis of private sector businesses, the Senate is convinced that if this situation is not properly handled, it will have negative implications for the Nigerian Business Environment and on foreign investments in Nigeria in general.

“The Senate regrets that a loan of this magnitude has the capacity of setting off another banking crisis in Nigeria, with banks looking for bailout funds once again.

“The Senate believes the Nigerian business environment must be protected and insulated from all forms of fraudulent dealings in order to advance the government’s drive towards promotion of genuine investments in Nigeria.

“The Senate regrets that about 4000 jobs are at stake as a result of these suspicious dealings; it notes that the decision of the core investors to pull out of Nigeria raises issues of suspicion, on the intent of a company in obtaining a loan facility, defaulting and then pulling out of the country, hoping that their shares would be used to write off the debts.

“The Senate is aware of allegations that the loans have been diverted to other uses not related to the business for which the huge loan was obtained, as there was no evidence of what the company did with the loans.”

Adeola explained that the syndicated loan was acquired in 2013 as a medium-term, seven-year facility to fund expansion of the network from a consortium of 13 banks in Nigeria, adding that Etisalat ownership comprises of three shareholders – the United Arab Emirates Sovereign Wealth Fund through Mubadala Development Comp Abu Dhabi (45%), Emirates Telecommunications Group Company (40%) and Myacinth (15%) through Emerging Markets Telecommunications Services.

Adeola said, “The Senate notes that as of 2016, the company had started defaulting on its $1.2bn loan obligations leading to a few bailouts from its parent company in Abu Dhabi. It understands that only about 42 per cent of the loan has been repaid, remaining an outstanding debt of $696m representing 58 per cent of its capital, which Etisalat has failed to service since 2016.

“The Senate understands that since this year, the banks have been moving to take over the telecommunications company in order to recover their funds;

“The Senate notes that the Nigerian Communications Commission and the Central Bank of Nigeria have intervened and raised issues of regulatory compliances in trying to prevent a takeover by the banks but the intervention has failed to produce an agreement on the debt restructuring.”

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