$1.2bn loan: Banks chill on Etisalat after govt’ intervention

There are strong indications that a consortium of 13 Nigerian banks that threatened to take over Etisalat over a syndicated $1.2 billion loan has agreed to take it easy on the telco following intervention by the Central Bank of Nigeria (CBN) and the Nigeria Communications Commission (NCC).
The agreement came about 24 hours after the banks refused to meet with the NCC for talks. The banks had accused the telecoms regulator of trying to shield their debtor, Etisalat, over the huge loan.
“We were able to get the banks to maintain status quo on Etisalat after the two key regulators intervened,” a top government official told BusinessDay on Friday, however, “We are particularly concerned about the massive loss of jobs and the system if that company folds up.”
The source said the concerned parties met to discuss way out and it was agreed that while talks go on how best to empower Etisalat from collapsing since the banks do not have the expertise to manage it, even if the company was finally handed over to them, the best way was to manage the company to pay the debt over time.
The CBN also confirmed such the discussions, saying it decided, alongside the NCC to intervene in the regulators in the loan dispute in order to prevent job losses and asset stripping.
In a mailed statement, the CBN spokesman, Isaac Okorafor, admitted that ordinarily the role of a regulator was not to decide how individual bad loans were resolved, but that the apex bank believed that “Etisalat is a systemically important telecommunications company with over 20 million subscribers that if not well handled, may have negative implications for the banking system itself.”
Okorafor further explained that the CBN and NCC, sensing that banks might go ahead in the usual way and downsize the company’s over 4,000 staff, reached an agreement to intervene and implore the consortium of banks to be reassess its position in dealing with Etisalat.
Okorafor described some media reports insinuating handwriting by CBN on the issue as “the height of mischief and insensitivity” explaining that the collaborative move by the regulators was aimed at preventing job losses and asset stripping and to ensure that Etisalat remains in business and is able to pay back the loans.
According to Okorafor, the CBN and the NCC, in the coming days, will meet with the syndicate of banks and the IHS Towers, the tower managers and the equipment suppliers, in order to achieve what he termed “a win-win outcome” for all stakeholders.
Etisalat has been enmeshed in a loan crisis with a consortium of 13 Nigerian banks that gave it a facility of about US$1.2 billion, on which the company has been unable to meet its repayment obligations in line with agreed terms of the facility.
Given the inability of Etisalat to come to an acceptable agreement with the banks, the largest shareholder in the company, Dubai-based Mubadala Development Company of the United Arab Emirates, has pulled out of the company as well as the ongoing negotiations, leaving only their local partners, led by Hakeem Belo-Osagie, to carry the burden.
It was based on the attempt of the banks to take over the company that the financial and telecommunications regulators have moved in to intervene and forestall downsizing and asset stripping.

 

ONYINYE NWACHUKWU, ABUJA & HOPE MOSES-ASHIKE