UBA appoints receiver/manager over KANN shares in Abuja DisCo
The United Bank for Africa, lender to KANN Consortium, the major shareholder of Abuja Electricity Distribution Company (AEDC) with 60 per cent equity, has forced a management change following a court order over loan default by the shareholder.
“It then became apparent that decisive steps were required to address the matter and BPE agreed with the lenders request to exercise its powers as Receiver/Manager over KANN by exercising its powers over the 60 percent equity in AEDC as a means to recovering the acquisition loan granted by the Bank,” said the regulator, the Nigerian Electricity Regulatory Commission (NERC) in a release published Wednesday.
There has been an ongoing dispute among competing factions of AEDC’s majority shareholder KANN limited and this dispute eventually spilled over to a dispute with the lender that provided the acquisition loan to KANN for the purchase of majority shares during the privatisation process in 2013, over KANN’s inability to service the debt to the bank.
AEDC has struggled to meet its obligations to the market under the terms and conditions of its license agreement and could not meet its obligations to key stakeholders including staff leading to an inability to pay workers salaries. This resulted in disruptions to power across the franchise areas.
“The UBA, as a lender, and in exercising its rights over the shares of KANN Consortium in AEDC, has taken over the shares of the obligor in the AEDC.
“This takeover of the majority stake in AEDC by UBA has consequently led to the reported changes in the management of AEDC.
“AEDC has, of recent, been facing significant operational challenges arising from a dispute between the core Investors (KANN consortium) as owners of 60 percent equity in AEDC and the UBA as lenders for the acquisition for the majority shareholding to the public utility.
“The Situation has currently deteriorated due to lack of access to intervention finances leading to a point whereby legitimate entitlements of the staff are being owed thus leading to service disruptions on 6th December 2021 within its franchise areas,” the release said.
The changes in shareholding in AEDC and the appointment of an interim management for AEDC by the shareholders has been endorsed by the Nigerian Electricity Regulatory Commission and the Bureau of Public Enterprises.