Here's a clearer understanding of the etisalat debt crisis - CAMPUS94


Entertainment, campus lifestyle, music

Post Top Ad

Post Top Ad

Tuesday, 27 June 2017

Here's a clearer understanding of the etisalat debt crisis

Zenith Bank’s exposure in the $1.2 billion (about N377.4 billion)
syndicated loan granted Etisalat Nigeria by a consortium of 13 Nigerian
banks accounts for about 3.5 per cent of its total loan book, a sensitivity
analysis report on the impact of the loan on the Nigerian economy has shown.

The report published Thursday by an independent investment banking services
specialist firm, Exotix Capital Limited, showed that Zenith Bank accounted
for about N80 billion of the total loan, which is the largest among the top
eight banks that participated in the loan syndication.

An official of Exotic Partners, a subsidiary of Exotix Capital Limited,
Jumai Mohammed, said about N42 billion contributed by Guaranty Trust Bank,
GTB, constitutes about 2.6 per cent of its total loan book value, while
about N40 billion by Access Bank accounts for about 2.2 per cent of the
bank’s total loan exposure.

Further details of the report showed that United Bank for Africa, UBA’s
contribution of N37 billion represents about 2.5 per cent of its loan book
value, while First Bank’s N24billion takes about 1.2 per cent; Fidelity
Bank (N17.5 billion) 2.4 per cent; Stanbic IBTC (N7.3 billion) 2.1 per
cent, and First City Monument Bank, FCMB (N4.5 billion), 0.7 per cent.

Although the report estimated a “modest impact” of the loan on the affected
banks, Ms. Mohammed said at a headline level, the facility to Etisalat
Nigeria represented only 1.9 per cent of the aggregate bank loans in the

Also, a sensitivity analysis of the loan showed that the facility on the
average would register a -12 per cent on net profit, -2 per cent on equity
and -0.3 basis points on the capital adequacy ratios in the 2017 financial
year of the banks.

“We believe the banks should easily be able to absorb a shock of this
magnitude,” Ms. Mohammed said.

“If this development is precursor to more general difficulties in the FCY
loan exposure, which represents on average 47 per cent of the total loan
book, then we may see more pronounced deterioration in the equity base of
banks. Within our coverage, Diamond Bank is likely to be most impacted,
while Wema Bank should be least impacted,” the report said.

Out of the total loan package, about $600 million (about N115billion) was
secured by assets by the company, which also pledged shares of the parent
company, Etisalat Group of UAE to the tune of $235million.

Etisalat Nigeria Vice President, Regulatory & Corporate Affairs, Ibrahim
Dikko, said on Thursday, the company had “consistently and conscientiously”
repaid about 42 per cent (about N504 million) of the original loan package.

“As at today, we can categorically state that the outstanding loan sum to
the consortium stands at $227million and N113billion, a total of about
$574million (if the Naira portion is converted to U.S. Dollars,” Mr. Dikko

With last Tuesday’s commencement of enforcement of the June 9 Default &
Security Enforcement Notice, Emirates Telecommunications Group Company
(Etisalat Group) has since announced its decision to quit the company.

In a filing with the Abu Dhabi Securities Exchange in Abu Dhabi, the UAE
group requested Emerging Markets Telecommunications Services, EMTS Holding
BV, a special purpose vehicle established in Netherlands, to transfer the
entire 70 per cent of its shareholding in Etisalat Nigeria to United
Capital Trustees Limited, the legal trustees of the banks effective June
15, 2017.

But, with the warning by the telecoms sector regulatory authority, the
Nigerian Communications Commission, NCC, that the law forbids Etisalat
Nigeria from transferring the operational license to a third party without
written permission, the report said the banks were weighing available
options open to them to move the process forward.

Although Globacom was said to have indicated interest to take over in the
past, current reality, relating to the unresolved debt crisis, may have
persuaded the company to abandon the idea.

Consequently, PREMIUM TIMES learnt Etisalat Nigeria was holding talks with
a group of private equity investors to raise funds defray the loans.

Where the discussion fail to yield positive fruits, a source familiar with
the transaction hinted the Central Bank of Nigeria, CBN, which said to be
very concerned about the impact of the crisis on the country’s unemployment
situation, may be willing to come forward with a bailout.

Given the weak state of Asset Management Corporation of Nigeria, AMCON,
finances, the source, who requested that his name should not be revealed,
as he was not authorized to speak on the issue, said he was not optimistic
of the apex bank’s intervention.

But, Ms. Mohammed said the recent directive by the CBN to exposed banks to
halt further action on the debt matter, there was an indication that some
form of bridge funding could be under consideration to cover the period
until a new investor emerges.

In 2013, Etisalat had obtained the syndicated loan from a consortium of 13
Nigerian banks, including Access Bank, Zenith Bank Plc, Guaranty Trust Bank
Plc, First Bank Limited, Fidelity Bank Plc, First City Monument Bank
(FCMB), Stanbic IBTC, Ecobank, United Bank for Africa (UBA) Plc and Union
Bank of Nigeria Plc.

The loan, which involved a foreign-backed guaranteed bond, was to help the
tele-mobile firm finance a major network rehabilitation, upgrade and
expansion of its operational base in Nigeria.

However, its alleged failure to meet agreed debt servicing obligations with
the banks since 2016 triggered a major crisis, culminating in the
withdrawal of its major shareholder, Emirates Telecommunications Group
Company from the company last week.

Etisalat Nigeria is currently left in the hands of EMTS promoted by the
former Chairman of United Bank for Africa (UBA), Hakeem Bello-Osagie.
Hakeem Bello-Osagie

Post Top Ad

Responsive Ads Here