Etisalat loan talks reach deadlock

• As lenders become restless

By Odunewu Segun

Talks between the Nigerian arm of Abu Dhabi’s Etisalat and 13 commercial banks in Nigeria to renegotiate the terms of a $1.2 billion loan have reached deadlock, National Daily has gathered.

The 13 banks led by GTB had in March opposed a proposal by Etisalat Nigeria to convert part of a $1.2 billion loan from dollars into naira and wanted the Abu Dhabi telecoms group and its other shareholders to recapitalise it instead.
A banker with knowledge of the negotiations said that the seven-year syndicated loan, on which Etisalat Nigeria missed a payment, has a dollar portion of $235 million which the telecoms operator wants to convert into naira to overcome hard currency shortages on Nigeria’s interbank market.

The banks, under pressure to avoid loan-loss provisions, are pushing to finalise the debt restructuring before next month’s half-yearly audit, a banking source said.

Etisalat met with the lenders in London on April 28 led by Guaranty Trust Bank but they could not agree a way forward, the sources said.

The telecom firm signed the medium-term seven-year facility with 13 local banks in 2013 to refinance a $650 million loan and fund expansion of its network, but is now struggling to repay.

“There is no conclusive view on the way forward,” one banker who declined to be named told National Daily after the meeting. “The most viable solution which the banks are pushing for is for the shareholders to inject equity into the business.”

A source at Etisalat, which owns 45 percent of the Nigerian company, said the company was not willing to invest more after converting some loans it made to the affiliate to equity and writing down its investment to $50 million.

Nigerian regulators in March agreed with local banks to pursue a default deal rather than a receivership for Etisalat Nigeria so as not to deter investors and to avoid a wider debt crisis.

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But lenders are keen to keep a lid on rising non-performing loans (NPLs) to preserve their capital as Africa’s biggest economy battles a recession and currency crisis. NPLs hit 14 percent in 2016 from 5.3 percent a year earlier.

Most of the 13 lenders involved in the Etisalat Nigeria loan had raised dollars abroad to participate, meaning that further naira weakness would see them receive fewer dollars.

The currency had lost half of its value since the loan, which matures in 2020, was made. Interest is due monthly and the next principal payment is due in May, the source said.

Etisalat owes GT Bank 42 billion naira, and Access Bank 40 billion naira. It owed Fidelity Bank 17.5 billion naira.

Etisalat Nigeria has 20 million subscribers, according to Nigeria’s telecom regulator, making it the country’s number four mobile operator with a 14 percent market share.