LAGOS Feb 11 The founder of Nigeria's largest
airline Arik Air, placed in receivership earlier this week,
accused the government of seizing Arik to meet a political goal
of creating a "national carrier" and said he would challenge the
move in court.
State-owned "bad bank" AMCON said on Thursday the move arose
from Arik's inability to pay workers and creditors. Arik is West
Africa's biggest airline by passenger numbers but has been hard
hit by Nigeria's currency crisis as its customers are invoiced
in naira but fuel suppliers are paid in dollars.
Arik founder Michael Arumemi-Ikhide said he believed the
government staged the move after a team travelled overseas in
search of partners but were turned down and advised to work with
the decade-old Arik.
"This (takeover) was designed by the government. Ever since
this government came into power there has been the ambition to
have a national carrier," Arumeni-Ikhide told Reuters. "We are
going to challenge the forceful takeover in court. By earlier
next week we will be filing the case."
Analysts say the dispute showcases the complexity of doing
business in Nigeria, with some suggesting it could damage
Nigeria's efforts to shake off its image as a risky frontier
market for international investors.
Arumemi-Ikhide said AMCON had used armed police to take
control of the airline on Thursday, but that shareholders have
retained their shares. AMCON said it had a court order to take
over Arik and had to use policemen and bailiffs to carry it out.
Arumeni-Ikhide said the action recalled 2010 when British
billionaire Richard Branson pulled out of Virgin Nigeria, a
10-year partnership with the Nigerian government he helped set
up, citing alleged interference by politicians and regulators.
AMCON said on Thursday a receivership manager had been put
in charge of Arik as the airline had been fallen into a
"precarious situation largely attributable to its heavy
financial debt burden (and) bad corporate governance".
Arumemi-Ikhide denied this. He said Arik's debt had been
secured as a Union Bank guarantee to buy new planes
through European export banks. But he said the dollar guarantee
was turned into a more expensive naira loan without recourse for
Arik when Union Bank was rescued by AMCON in 2010 to help stem a
That brought Arik's total indebtedness to 147 billion naira
($484 million). But Arumemi-Ikhide said Arik had grown rapidly
and had been planning to raise equity capital of as much as $1
billion in the second quarter and then a possible stock market
listing in Lagos and London, rather than sourcing debt.
He said Arik had an enterprise value of around $4 billion.
In 2015, the Nigerian government set up a committee on
establishing a national airline, in fulfilment of campaign
promises which brought President Muhammadu Buhari's All
Progressive Congress (APC) to power.
An APC transition paper seen by Reuters had proposed merging
a dozen debt-laden airlines on AMCON's books into a single
carrier. It would include Arik and operate in partnership with a
global airline to serve the West and Central African region.
($1 = 304.00 naira)
(Editing by Mark Heinrich)