(Adds banking source, lenders on the deal)
By Chijioke Ohuocha
LAGOS, March 8 The Nigerian affiliate of Abu
Dhabi-listed telecoms company Etisalat is in talks
with local banks to renegotiate the terms of a $1.2 billion loan
it took out four years ago after missing a payment, a senior
executive told Reuters.
Ibrahim Dikko, vice president for regulatory affairs at
Etisalat Nigeria, said Etisalat missed payments due to an
economic downturn in Nigeria, a currency devaluation there and
dollar shortages on the country's interbank market.
"We are in discussions with our bankers and have been for
quite a while. They have not taken over the business and we are
hoping that we can resolve the issue and find a way to
renegotiate terms," Dikko told Reuters.
Emirates Telecommunications Group (Etisalat) owns a 40
percent stake in its Nigerian affiliate, which accounted for
around 3.7 percent of the group's revenue in 2013.
Etisalat Nigeria signed a $1.2 billion medium-term facility
with 13 Nigerian banks in 2013, which it used to refinance an
existing $650 million loan and fund a modernisation of its
Dikko said the business performed well last year and it was
still in profit at the level of earnings before interest, tax,
depreciation and amortisation, while loan repayments had been up
to date "until recently".
He said that the company was now looking at "all the
options", which could include converting the loan into naira,
but did not want to anticipate the outcome of talks with the
SKIN IN THE GAME
A banking source with knowledge of matter said Etisalat
Nigeria had given notice to Nigerian lenders that it would miss
a payment in February which triggered a debt discussion, adding
that they were yet to agree on terms.
"We want to see more skin in the game from the foreign
parent. They also have a shareholder loan we want them to
convert into equity which would put less pressure on cash flow
and its receivables," the banker said.
The source said lenders wanted Etisalat to increase its
stake in its Nigerian affiliate in order to reduce the risk of
the company pulling out of the country due to the debt issue.
Banks involved in the loan deal include: Zenith Bank
, GT Bank, First Bank, UBA
, Fidelity Bank, Access Bank,
Ecobank, FCMB, Stanbic IBTC Bank
and Union Bank.
Several other firms took out dollar loans in 2013 to expand
at a time Nigeria was seen as an attractive investment prospect.
Its economy was growing at 7 percent with a stable currency and
oil prices were rising.
But now the country has been running short of dollars as oil
revenues have fallen along with the price of crude, pushing the
economy into its first recession in a quarter of a century. That
has weakened the naira which trades at a lower level on the
black market than the official interbank rate versus the dollar.
The dollar shortages have made it difficult for local
companies to get access to foreign currency and as a result some
have struggled to repay dollar-denominated debts with several
lenders having restructured loans to oil firms.
Last month Nigeria's biggest airline Arik Air was placed in
receivership by the country's "bad bank" AMCON for unpaid debts
of around 147 billion naira.
(Editing by Jane Merriman, Greg Mahlich)