Liquidating Arik Air is still an option for us – AMCON 

The Asset Management Corporation of Nigeria (AMCON) has disclosed that the option to liquidate Arik Air is still on the table following several efforts it has made to revive the airline.

Speaking during a press conference with aviation reporters in Lagos, Jude Nwauzor, Head, of the Corporate Communications Department, AMCON, said the AMCON Act, in Section 6 empowers the corporation to purchase, manage, and dispose of EBAs, which include Arik.

Nwauzor also noted that section 48 empowers the corporation to appoint a Receiver or Receiver Manager to take, manage, and dispose of assets of a debtor company like Arik.

He said considering the powers that AMCON possesses according to the law, liquidating Arik Air remains an option for it.

He said Arik was managed in its bad state and already insolvent, without any kobo from anyone by the corporation, adding that the Corporation met trade creditors to Arik debt, debt to its technical partners, and debt to other aviation experts all over the world.

” Managing these debts was challenging for the corporation, which still can liquidate Arik. But here we are still managing Arik, which was already insolvent and still insolvent even as we discuss,” Nwauzor said.

He said a KPMG report commissioned by AMCON revealed that Arik was balance-sheet insolvent, with a negative equity value of approximately ₦80 billion and total liabilities amounting to ₦289 billion as of December 31, 2016.

Additionally, PwC Nigeria, the company’s long-standing auditors (previously appointed by Johnson Arumemi-Ikhide), conducted audits for the years 2015 and 2016, he said.

These audits, he noted confirmed that Arik had been technically insolvent since 2014, with its liabilities exceeding its assets throughout 2015 and 2016, up until the commencement of the receivership in 2017.

“As of December 2016, Arik’s negative shareholder capital stood at ₦139 billion, nearly equivalent to its debt to AMCON,” Nwauzor added.

He said amongst several inaccurate claims,  Johnson Arumemi-Ikhide, the founder of Arik, has consistently peddled a false narrative regarding his debt to AMCON, claiming that Arik never defaulted in its payment obligations to Union Bank and feigning ignorance of the debt owed to AMCON.

Nwauzor said Arumemi-Ikhide has also alleged that the receivership was premature and claimed his loan was performing.

“These claims are misleading. The intelligent public must ask, if the loan was performing, why was it sold and restructured? And why did he agree to the restructuring? Did he fulfil the agreed terms?

“The decision to classify the loan as non-performing and to sell it was made by Union Bank of Nigeria PLC (UBN), by the Prudential Guidelines set by the Central Bank of Nigeria (CBN). Union Bank willingly offered the Arik loans to AMCON, which purchased the loans in compliance with the law.

“In a letter dated October 22, 2010, UBN informed Arik that its loans, which amounted to a staggering $474 million (approximately ₦70 billion at the time), were non-performing and posed a threat to the bank’s stability. This loan exposure was a significant factor in Union Bank’s financial challenges.

“It is important to note that beyond Union Bank, Arik’s loans were also sold to AMCON by Bank PHB (now Keystone Bank), and  Arumemi-Ikhide has, on several occasions, admitted to this indebtedness,” he disclosed.

He further explained that following the purchase of the loans, Arumemi-Ikhide willingly agreed to restructure the loans, acknowledging the debt.

“In any event, any challenge of the purchase of the NPLs by AMCON is statute-barred and there are provisions within the AMCON Act demonstrating that there is no valid cause of action that may arise from such a challenge.

“In any event, from 2011 to 2017, AMCON engaged in prolonged negotiations with Arik’s management (who never questioned the NPLs), but despite several financial accommodations, debt reduction offers, and restructuring efforts, Arik consistently defaulted on its obligations. AMCON was left with no choice but to consider various recovery options,” he said.