The consortium of banks that arranged a syndicated loan for Etisalat Nigeria and Abu Dhabi telecoms group are urging its parent company to recapitalise the $1.2 billion loan, but the telco is insisting on the conversion of the $1.2 billion loan to naira.
According to Reuters, the seven-year syndicated loan on which Etisalat Nigeria missed a payment has a dollar component of $235 million, which the telecoms operator wants to convert into naira to overcome its hard currency shortages on Nigeria’s interbank market.
“Etisalat is asking for us to convert the dollar component to naira but banks don’t want that option and have urged it to talk to its parent company to settle the loan.”
The UAE’s Etisalat owns 45 per cent of Etisalat Nigeria, while Abu Dhabi’s Mubadala owns 40 per cent of the company. The outcome of yesterday’s mediation between the parties involving the Central Bank of Nigeria (CBN) and the telecoms regulator, is not yet known.
The meeting came after authorities agreed with local banks to prevent Etisalat Nigeria from going into receivership.
Nigeria is facing dollar shortages due to low global oil prices, its major export. Its economy entered a recession last year for the first time in 25 years.
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.
However, there are fears in some quarters that Etisalat, which generates 3.7 per cent of its revenues from the Nigerian business may sell its stake after questioning the rationale of investing more in it.
Etisalat had written down the value of Etisalat Nigeria last year to $50 million due to naira weakness, Moody’s said in a note, adding that the default at the affiliate company did not affect the parent’s credit profile.
The firm owes GTBank N42 billion, Access Bank, N40 billion while being indebted to Fidelity Bank to the tune of N17.5 billion.