Banks reject converting Etisalat dollar loan to naira

Nigerian banks are opposed to converting the dollar portion of a $1.2 billion loan to Etisalat Nigeria into naira and will push for an equity injection as part of new terms after the mobile telecoms operator missed a payment, a banker with knowledge of the negotiations told Reuters.

The dollar portion of the loan is about $235 million, the banking source said.

Hakeem Belo-Osagie, Etisalat chairman in Nigeria

Etisalat Nigeria will meet with lenders on Thursday in a debt discussion mediated by the central bank and the telecom regulator after authorities agreed with local banks to end the prospect of a receivership for the mobile operator.

The Nigerian banks include Guaranty Trust Bank, Access Bank, Zenith Bank and Fidelity Bank.

Meanwhile, Fidelity Bank has stated that it has exposure of around 17.5 billion naira ($56 million) to Etisalat Nigeria, the Nigerian lender’s investor relations team said on Thursday.

The Nigerian arm 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.

Nigeria Communication Commission (NCC) and the Central Bank of Nigeria (CBN) had to intervene last week as they stopped the takeover of Etisalat by the banks.

“Friday’s meeting succeeded in halting the attempt by Etisalat’s creditors at bringing it under any form of takeover,” the National Communications Commission (NCC) said in statement.

The central bank and the affected lenders took part in the meeting in Lagos. Central bank Governor Godwin Emefiele chaired the meeting.

“Receivership was completely taken off the table in a meeting that was very productive and constructive,” the NCC added.

It gave no details, but said a follow-up meeting on Thursday would discuss a restructuring of the loan payment.

“The banks and the mobile network operator agreed to concrete actions that will bring all parties closest to a resolution,” the NCC said.

The NCC also said the regulators will meet with Etisalat shareholders “anytime soon.”

The consortium of 13 banks had asked Etisalat to convert loans from its parent into equity and inject fresh capital into its Nigerian affiliate.