Banks tap two advisers to manage Etisalat sale

With calm returning to the relationship between Etisalat and the group of creditor banks from which the company borrowed about $1.25bn, the way is now clear for a process leading to the sale of the telecoms firm to a new core investor.

Sources have told BusinessDay that the banks were surprised by the sudden resignation of Keem Belo-Osagie, the chairman of Etisalat, who is also the major Nigerian minority holder of the embattled telecom firm. Belo-Osagie has not been reached since he resigned and travelled out of the country last Friday. Initial speculations had been that he could move to buy over the abandoned shares from the Etisalat Group and Mubadala.

Nonetheless, the creditor banks are on the verge of appointing two international advisers to manage the process of securing a new core investor for Etisalat Nigeria, following a deal brokered by both the Central Bank and the telecoms regulator, NCC.

The banks are confident that Etisalat, which makes a monthly turnover of over N20bn, will attract significant interest from both local and foreign investors.

The advisers have already been identified and are to begin work immediately.

Speaking to BusinessDay yesterday, the CEO of one of the creditor banks said the banks never showed any interest in taking over the shareholding of Etisalat.

“All we have been saying, is that we want our money paid”, he told our reporter. “Now that the noise is over, our next step is to announce the appointment of two international advisers to handle the sale. Etisalat is a good business and we continue to receive serious offers from both within and from abroad.”

It will be the job of the investment banks, once their appointment is announced, to champion the transaction leading to the sale of the shares once held by Etisalat UAE.

The deal that brought peace mandated the two regulators to nominate a chairman, following the insistence of the creditor banks that Keem Belo-Osagie vacate the seat, while the banks were given the power to recruit a CEO and CFO for Etisalat.

However, the banks also accepted to allow the former CEO, David Wilshere, to run out his contract, following which he will be retained as a consultant, along with the former CFO.

“We fully understand that the management was not the problem and it did not make sense to us to see them suffer for the mess created by the shareholders,” the bank CEO told BusinessDay.

The consortium of 13 Nigerian banks, the Central Bank of Nigeria (CBN) and Etisalat shareholders, appointed the new board of directors to continue the operations of the telecommunications company as part of the takeover agreement on 4 July.

The new appointees to the Etisalat board are Joseph Nnanna, an economist and Central Banker, as the new Chairman; Oluseyi Bickersteth, a national senior partner of KPMG, as non- executive director; Boye Olusanya, former Deputy Chief Executive Officer of Econet Wireless and Celtel Nigeria, as Chief Executive Officer; Funke Ighodaro, a chartered accountant and former Chief Financial Officer of Tiger Brands Limited and Ken Igbokwe, who is also an accountant and the Country Business Executive Leader of Price Waterhouse Coopers (PwC) Nigeria and West Africa.

The management will be in place and stabilise the operations of the telecom firm until a final resolution is reached on the current debt situation.

Based on the deal with the creditor banks, they will take over control of the business side of Etisalat, not the shareholding, to secure the company’s cash flows.

Four of the nominated directors were from the creditor banks, while the minority Nigerian shareholders were allowed to nominate two directors to the board, but it is not clear if they have done so yet.

Sources in the banks also emphasised that the deal does not come with any reprieve from the Central Bank in terms of the requirement for them to make due provision for the Etisalat credit, but the banks are hopeful that the process of securing a new core investors would happen quickly enough to avoid the need for them to make any provisions.