Nigeria’s major carrier, Arik Air, may soon get over its debt crisis as shareholders are having deep discussion with a major investor, who would take over significant shares from the company and provide the funds to offset the debts of the airline owed to Asset Management Corporation of Nigeria (AMCON) and other creditors.
Investigations revealed that the company interested in investing in the airline is a Middle East-based conglomerate, which has its headquarters in Dubai and has interest to do business in Africa, as the continent has been projected as new bastion of hope for economic development in the world.
Negotiations was held in London last week, had advanced to the level that the two companies have made “headline” commitments as discussion continues. The Basis of discussion is on the shareholding and the depth of the debts, which creditors must back with evidence, and also operational conditions.
Chairman Arik Air, Sir Joseph Arumemi-Ikhide said the investors has started negotiation with the shareholders of the company and so far both parties had had fruitful discussions as negotiation continues.
Although, there are indications that some top government officials might be privy to the negotiation and that the Middle East-based company is the third organization that had contacted Arik Air shareholders on partnership, including a company from the United States.
The company, is also interested in investing in power and agriculture in Nigeria and has been in discussion with another company on investing in the power sector and also thinking of building a maintenance, repair and overhaul (MRO) facility if they get the support of the government of Nigeria.
The Middle East-based company has been monitoring Arik Air activities in the last two years and has seen it as strong platform to make in-road in air transport in Africa.
“We have been having discussions with investors and 10 days ago we had discussion with a US-based company, but we are having serious discussion now with this organization, which is based in the Middle East because they have a package to invest in Africa and take advantage of the growing economy in the region. We have reached agreement on what I will call the sub-heads but the details will come out in our next discussion, but so far the discussion has been fruitful.
“They are interested in expanding our operations and will give us additional airplanes in addition to the six we ordered from Boeing; so we have to expand our operations throughout Africa and other international destinations with their partnership. They are eager to invest in Nigeria but, of course, with the support of the Nigerian government and they said that government support is crucial because you cannot really succeed in airline business without government’s support and that is necessary for them to invest in Nigeria or they will take their funds to another African country,”.
Arik Air shareholders are putting a strong team for the next round of discussion, including Deloitte UK, Barclays Africa and UK-based law firm.
In addition to international creditors, AMCON claims that Arik Air owed it N263.7 billion, but the airline had argued that its total debt exposure, including that of international creditors and local debts amounted to N160 billion, which represents a 16.4 per cent of its value put at $3.2 billion by Deloitte UK in 2013.