According to Reuters, two sources with knowledge of the matter between the Nigerian arm of Abu Dhabi’s Etisalat and its lenders disclosed that talks between both parties to renegotiate the terms of a $1.2 billion loan have reached a deadlock. The lenders led by Guaranty Trust Bank had a meeting with Etisalat in London on April 28, 2017, after the telecoms firm missed a payment.
It would be recalled that in March, the Telcom company was in the news because of a takeover bid by a consortium of Nigerian banks. It was reported that the telecommunication company got a $1.2 billion medium-term syndicated loan facility from 13 banks. These banks include First Bank, Zenith, Guaranty Trust Bank, United Bank of Africa Plc, Fidelity Bank Plc and Access Bank. The company took the loan to refinance an existing commercial medium-term debt of $650 million and continue its network roll out across the country. It has since defaulted in making payment, thereby forcing the banks to report Etisalat to the Central Bank of Nigeria (CBN) and the National Communications Commission (NCC).
“There is no conclusive view on the way forward. The most viable solution which the banks are pushing for is for the shareholders to inject equity into the business,” one banker who declined to be named told Reuters after the meeting.
However, Reuters’ source at Etisalat said the company was not willing to invest more after converting some loans it made to the affiliate to equity and writing down its investment to $50 million.
Nigerian lenders are pushing to finalise the debt restructuring because they are under pressure to avoid loan-loss provisions before next month’s half-yearly audit. Non-Performing Loans (NPLs) in Nigeria hit 14 percent in 2016 from 5.3 percent recorded in 2015. As a result of this, lenders are determined to keep a lid on NPLs in order to preserve capital as Nigeria is grappling with recession and fighting hard to save its currency.
Etisalat owns 14 percent market shares, Airtel 19 percent, Globacom 20 percent and MTN has 47 percent.