Etisalat Nigeria defaults in $1.2bn loan payment

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Stanley Opara and Ozioma Ubabukoh with agency report

The Nigerian affiliate of Abu Dhabi-listed telecommunications company, Etisalat, is in talks with local banks to renegotiate the terms of a $1.2bn loan it took four years ago after missing a payment, a senior executive has said.

The Vice-President, Regulatory Affairs, Etisalat Nigeria, Ibrahim Dikko, said the firm missed payment schedules due to an economic downturn in the country, devaluation of the naira and dollar shortages in the interbank market.

“We are in discussions with our bankers and have been for quite a while. They have not taken over the business and we are hoping that we can resolve the issue and find a way to renegotiate terms,” Dikko was quoted by Reuters  to have said.

He later told one of our correspondents, “We are negotiating our loan. It has been ongoing for quite a while now. But I as speak to you, no person has taken over Etisalat’s operations. As a management, we are just committed at keeping the business running and servicing our customers. We hope to conclude the discussions with the banks.

“Yes, Etisalat owes the banks. It is a syndicated loan. If you will recall in 2013, it was announced all over the papers that we took a syndicated loan facility. We are in discussion to renegotiate the terms.

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 “The current outstanding on the syndicated loan is around $500m. This is because we have been repaying since then, not that we just took the loan and never paid. I can’t really say the percentage that has been paid. We are in discussion now.

“We are in discussion on our syndicated loans facilities with our bankers. Nobody has taken over our operations right now. It is not an outcome anybody is hoping for and we shall continue to focus on managing our operations, while discussions are ongoing.”

Emirates Telecommunications Group (Etisalat) owns a 40 per cent stake in its Nigerian affiliate, which accounted for around 3.7 per cent of the group’s revenue in 2013.

Etisalat Nigeria signed a $1.2bn medium-term facility with 13 local banks in 2013, which it used to refinance an existing $650m loan and fund a modernisation of its network.

Dikko said the business performed well last year and it was still in profit at the level of earnings before interest, tax, depreciation and amortisation, while loan repayments had been up to date “until recently.”

He said that the company was now looking at “all the options,” which could include converting the loan into naira, but did not want to anticipate the outcome of talks with the lenders.

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A banking source with knowledge of matter said Etisalat Nigeria had given notice to the lenders that it would miss a payment schedule in February, which triggered a debt discussion, adding that they had yet to agree on terms.

“We want to see more skin in the game from the foreign parent. They also have a shareholder loan we want them to convert into equity, which would put less pressure on cash flow and its receivables,” the banker said.

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