Etisalat Nigeria, on Tuesday, said it has initiated changes to its shareholding structure after talks with banks to restructure a $1.2 billion debt failed.
The company has been negotiating with the banks to restructure its loan after missing repayments, but the parties failed to reach an agreement.
Etisalat’s revenue was hit by the dollar shortages plaguing Nigeria’s financial system, because of lower oil prices and economic recession, leaving it struggling to make the loan repayments.
The company had agreed to a seven-year loan facility with 13 local banks in 2013 to refinance a $650 million loan and fund expansion of its network.
Reuters reports that UAE’s Etisalat, with a 45 percent stake in the Nigerian arm, has been ordered to transfer its shares to a loan trustee by June 23, after negotiations failed.
Ibrahim Dikko, vice president for regulatory affairs at Etisalat Nigeria, also told Reuters that management was continuing to run the business after the shareholding changes and that there were contractual and regulatory issues to be finalised.
The Nigerian Communications Commission (NCC) had tried to prevent the banks placing the telecom firm into receivership to avoid a wider debt crisis and agreed with them to pursue a default deal.
But the concerned banks, under pressure to avoid loan-loss provisions, have been pushing to finalise restructuring before half-yearly audits this month.
Sources say Etisalat, which generates 3.7 percent of its revenue from the Nigerian business, had questioned the rationale of investing more in the local unit, when asked by creditors to recapitalise its affiliate as an option.
Abu Dhabi state-investment fund, Mubadala, the second-biggest shareholder in Etisalat Nigeria, is yet to issue a statement.
A spokesman for Etisalat Nigeria told Reuters the company was still in discussions with creditors to find a “non-disruptive” solution.
Dikko said services to its subscribers will not be affected by the changes in shareholding.
UAE’s Etisalat said its financial exposure to Etisalat Nigeria was related to operational services worth $52 million and that discussions were ongoing with the banks regarding the use of the Etisalat brand name.
Etisalat Nigeria has 20 million registered subscribers, according to NCC.
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