According to sources close to Etisalat, the six Mubadala and Etisalat Group-appointed Non-executive Directors (NEDs), all nationals of the United Arab Emirates, resigned last week, following Emirates Telecoms Group Company’s (Etisalat Group) reporting disclosure on the Abu Dhabi Stock Exchange that it was transferring 45 per cent of its stake and 25 per cent of its preference shares in its Nigerian subsidiary to United Capital Trustees Limited, the legal representative of the lending banks.
Other shareholders of Etisalat Nigeria include Mubadala Development Company with a 40 per cent stake and Emerging Markets Telecommunications Services (EMTS), representing the Nigerian shareholders, with 15 per cent.
The consortium of banks had threatened to takeover the operations of the telecoms company, unless it repaid the loan in full.
One source who was aware of the directors’ resignation said that they stepped down from the board intentionally in an attempt to exonerate themselves from the liability of the debt default that has enveloped Etisalat Nigeria, but said the banks will not allow them to go scot-free.
He explained that what the directors forgot is that they had used a Dutch-registered company, of which they are also the directors, to guaranty the loans from the banks, and as such cannot run away from their obligations to their Nigerian lenders.
“Yes, they resigned because they are trying to absolve themselves of the loans they have left behind.
“But they cannot run away because they had used a company registered in the Netherlands where they are directors to guaranty the loans, so they will still be held liable should Etisalat Nigeria fail to repay the loans to the banks,” he said.
He also disclosed that the only NED left on the board was the chairman, Belo-Osagie, clarifying that the Chief Executive Officer of Etisalat Nigeria, Mr. Matthew Wilshire, Chief Financial Officer, Chief Information Officer and Chief Commercial Officer are not directors of the company.
But as the crisis in Etisalat assumes a new dimension, it was also learnt that the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) have summoned a meeting, inviting the 13 banks, equipment suppliers and IHS, a telecoms tower and infrastructure provider, for a meeting friday.
They are slated to meet with NCC and CBN in Abuja to address the situation in order to stem value erosion of the network provider and job losses.
The banks, said a source, are also keen on reaching a resolution, as they would rather not appoint a receiver manager for Etisalat Nigeria.
Right now, the noose is being tightened around Etislat’s neck to repay the loan, with shareholder groups in the capital market advising the firm to settle the debt, even as the banks are insisting on the prosecution of the foreign directors of the company and its principal, Mubadala.
The banks claim that the Mubadala-appointed CFO of Etisalat Nigeria diverted over $700,000 from the proceeds of the sale of its towers to IHS.
According to bank officials, they had financed the import and purchase of the towers through Huawei of China to help build the infrastructure backbone for Etisalat.
But when the telco earned foreign currencies from the sale, it failed to repay its USD loans as was done by other telcos like MTN and Airtel.
The shareholder groups are equally insisting that Etisalat must settle its indebtedness to the banks, so that the lenders in turn can pay dividends to their shareholders
Etisalat had in 2013 approached a consortium of 13 local banks for a loan of $1.2 billion for network upgrade and expansion. The money was sourced in dollar and naira components.
However, citing the economic downturn of 2015-2016 and naira devaluation, which negatively impacted on the dollar-denominated component of the loan, Etisalat wrote its creditors informing them of its intention to halt the installment repayment of the loan, until such a time that it was able to raise more money.
Unsatisfied with the excuse from Etisalat, the banks threatened to takeover the operations of the telecoms company should it fail to meet its payment obligations.
The situation forced Etisalat to enter into negotiations with the banks, seeking unreasonable write-offs, which the banks have so far rejected.
The impasse eventually led to Etisalat Group’s withdrawal from its Nigerian operations last week, leaving behind Mubadala and EMTS.