Etisalat Nigeria has lost the support of UAE-based investment fund Mubadala after the operator failed to agree renewed terms on a $1.2 billion loan that it took out four years ago.
Nigeria’s central bank has stated that the fund “pulled out” of the operator, dropping out of active talks with Etisalat’s creditors that were being held in an attempt to avoid job losses or asset seizure. Mudadala is believed to own as much as 40% of Etisalat Nigeria.
The Nigerian unit of Etisalat took out the $1.2B loan across 13 Nigerian banks in 2013. Thus far it has paid back $500 million of the total amount, but then defaulted on repayments in February this year, chalking this up to a nationwide economic downturn, a lack of available US currency on Nigeria’s interbank market, and devaluation of the Nigerian naira.
At this point, the Nigerian Communications Commission and the country’s central bank intervened rather than allowing the operator to be taken over by its creditors or placed into receivership.
The negotiation breakdown has resulted in the operator’s parent firm Etisalat receiving orders to transfer its shares over to a loan trustee. It holds a 45% stake in Etisalat Nigeria, although its holding currently has a value of nil.
The withdrawal of both Mubadala and Etisalat means that the operator’s local partners are its sole remaining investors. They are led by the firm’s chairman, Hakeem Belo-Osagie. However, the NCC and central bank have agreed to negotiate with lenders to reach a mutually beneficial deal.