Etisalat in talks with Mubadala, banks to resolve debt crisis

Etisalat Nigeria is engaged with its bankers and Abu Dhabi state investment fund Mubadala, the second-largest shareholder in the business, to resolve debt woes it said were caused by a devaluation of the Naira.
Mubadala spokesman Brian Lott told Reuters weekend that report saying that the fund has pulled out of Etisalat Nigeria was wrong saying that several proposals are under discussion.
He declined to elaborate on the options being considered but said he will know more next week. The Nigerian affiliate of Abu Dhabi-listed Etisalat has said it is in talks to restructure a $1.2 billion loan after missing a repayment, though sources have said that talks reached a deadlock on April 28. Ibrahim Dikko, vice president for regulatory affairs at Etisalat Nigeria, said on that discussions with banks have reached an advanced stage and he expects a deal to be reached next week.

Sources have said that Etisalat Nigeria has asked its bankers to take equity in the business and convert the dollar portion of the loan to Naira, which the banks rejected. The banks have instead asked parent Etisalat to inject more cash, the sources said. Dikko said that the company was “considering a number of options and not taking anything off the table at this time”. He said that Etisalat Nigeria is a viable business and recorded its best financial year in 2016. Etisalat, which owns 45 per cent of the Nigerian company, is not willing to invest more after converting some of the affiliate’s loans into equity and writing down its investment to $50 million, a source has said.

Abu Dhabi’s state-owned fund Mubadala owns another 40 per cent.
Oil-rich Abu Dhabi, the capital of the United Arab Emirates, has been divesting some of its investments as crude prices have continued a lengthy slump.
The chief executive of Mubadala, which owns 40 per cent of Etisalat Nigeria, told Reuters in March that the state-owned fund could pare down its stakes in some companies.

The loan that has proved so troubling for Etisalat Nigeria is a seven-year facility agreed with 13 local banks in 2013 to refinance a $650 million loan and fund expansion of its network. The company, however, is the biggest foreign-owned victim of dollar shortages plaguing Nigeria’s financial system because of lower oil prices and economic recession, leaving it struggling to make the loan repayments.

Nigerian regulators have agreed with local banks to pursue a default deal rather than receivership to avoid a wider debt crisis. But bankers, under pressure to avoid loan-loss provisions, are pushing to finalise the restructuring before half-yearly audits this month.
“Parties are keen to ensure that the ongoing discussions and eventual outcome do not affect the day-to-day operations of the business whether now or after the announcement of our agreement,” Dikko said in a statement.