…ask telecoms firm to clear debt
Shareholders of the 13 banks involved in the N1.2 billion loan for Etisalat Nigeria have asked the telecoms company to pay up its debt in order to guarantee the payment of annual dividends.
The shareholder group told the News Agency of Nigeria in Lagos on Tuesday that the company risks legal action by the banks if it failed to settle its outstanding loan obligation.
The National Coordinator, Progressive Shareholders Association of Nigeria, Boniface Okezie, said the affected banks should approach the court for receivership if Etisalat failed to settle the debt.
Mr. Okezie said in view of the obligations the banks have to their shareholders, in terms of dividend payment at the end of the financial year, it was incumbent on Etisalat to pay the debt.
On his part, the Chairman of Nigeria Professional Shareholders Association, Godwin Anono, said the company was under obligation to settle the debt, since the transaction was in line with the customer-bank relationship, involving terms and conditions that must be obeyed.
Mr. Anono said the shareholders were in support of the banks’ move to acquire the company if it failed to settle the loan.
“This is like any other transaction. It’s not government business. I stand on existing protocol to say that the banks should acquire the company if it fails to settle the debt,” he said.
The Head Research, SCM Capital Ltd, Sewa Wusu, said where there was any breach of the terms and conditions of the loan between Etisalat and the consortium of banks, then the normal legal process should be followed.
Mr. Wusu said the issue was beginning to elicit concerns in the banking industry considering the amount involved and its potential impact on the balance sheets of the banks banks.
“Since the monetary authority is also involved in the negotiation, I am sure this will ensure prompt settlement of the situation among the parties,” he said.
Etisalat had obtained a $1.2 billion (N377.4 billion) syndicated loan in 2013, from a consortium of 13 Nigerian banks, to finance a major network rehabilitation, upgrade and expansion of its operational base in Nigeria.
The consortium of banks include Access Bank, Zenith Bank Plc, Guaranty Trust Bank Plc, First Bank Limited, Fidelity Bank Plc, First City Monument Bank (FCMB), Stanbic IBTC, Ecobank, United Bank for Africa (UBA) Plc and Union Bank of Nigeria Plc.
Zenith Bank, Guaranty Trust Bank and Access Bank have the top three exposures of the total loan – N80 billion, N42 billion and N40 billion respectively.
Etisalat Nigeria said last week it had paid about half of the initial loan (about N504billion), leaving a total outstanding sum of about $574 million.
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