Etisalat: CBN, 13 banks parley on debt reschedule

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To forestall the takeover of Etisalat  Nigeria Limited by its creditors, the Central Bank of Nigeria (CBN) is to hold meeting with the 13 banks today to resolve the telco’s multi-billion naira debt crisis.

According to a foreign news outlet, the Nigerian Communications Commission (NCC) met with the apex bank on Thursday to discuss the $1.2 billion loan renegotiation between Etisalat Nigeria and a group of local lenders in order to forestall a possible takeover of the company by the banks.

The NCC Chairman, Umar Danbatta, met with CBN Governor, Mr Godwin Emefiele, with the aim of intervening to protect subscribers and investors, the NCC said in a statement. It added that CBN has invited the management of Etisalat Nigeria and the consortium of 13 lenders to a meeting today (Friday) to find an amicable resolution of the crisis.

Etisalat Nigeria, which is in talks with local banks on renegotiating the terms of a $1.2 billion loan after missing a payment, owes N40 billion ($131 million) to Access Bank, its CEO, Herbert Wigwe , was quoted as saying on Thursday.

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Wigwe said the loan talks were triggered 10-days ago when the company asked lenders to “stand still” on the loan for it to review its operations. He also said that Etisalat Nigeria’s parent Emirates Telecommunications Group (Etisalat) had converted a loan to the Nigerian company into shares to free up cashflows and was being asked to inject more equity capital.

“Banks are saying we would need an equity injection or commitment to support the business. That is being discussed,” he told an analysts’ call when asked about Access Bank’s loan book.

Wigwe said the bank was monitoring the level of non-performing loans on its books but the Etisalat loan was classified as “performing” and saw no need to make a provision.

Etisalat Nigeria accounted for around 3.7 percent of the group’s revenue in 2013 and has a mobile market share of 13.3 percent in Nigeria, behind South Africa’s MTN’s, Globacom and Airtel, a subsidiary of India’s Bharti Airtel, according to the regulator.

The Telco had signed a $1.2 billion medium-term facility with 13 Nigerian banks in 2013, which it used to refinance an existing $650 million loan and fund a modernisation of its network. But the company missed payments due to the economic downturn in Nigeria, a currency devaluation and the shortage of dollars in the country’s interbank market.

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Wigwe said the discussion was “difficult” and the Emirates Telecommunications Group, which hitherto owned 40 percent of Etisalat Nigeria, had questioned why it needed to import more capital into Nigeria at a time when the economy was facing its first recession in a quarter of a century.

No one at Etisalat was immediately available to comment. Other lenders on the loan deal include: Zenith Bank , GT Bank, First Bank, UBA , Fidelity Bank, Ecobank, FCMB , Stanbic IBTC Bank and Union Bank.

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