Access Bank PLC

Arik Air Owner, Joseph Arumemi-Ikhide Owes Banks N263.7bn!

First Bank Nigeria

The Asset Management Corporation of Nigeria (AMCON) has declared that the total debt owed the corporation by businesses where Joseph Arumemi-Ikhide is a major shareholder amounts to N263.7 billion.

These debts include Arik Air – N146. 2 billion; Rockson Engineering – N107 billion; Ojemai Farms Limited – N8.6 billion; and Ojemai Investment Limited – N1.9 billion.

The founder and Chairman of Arik Air had insisted that the total debt exposure the airline owed AMCON was N90 billion, admitting that the airline also owed Zenith Bank N35 billion, Access Bank N7 billion and Ecobank N12 billion, bringing the debts to N140 billion.

But a statement from AMCON signed by its Head of Corporate Communications, Jude Nwauzor, the corporation insisted that Arik Air owed it N146.2 billion.

Nwauzor said in line with AMCON’s statutory mandate, the non-performing loans of Arik were acquired in 2011 from two distressed banks, which include Union Bank Plc – N71billion and Keystone Bank Limited – N14billion (transaction originated by defunct Bank PHB, amounting to N85 billion.

AMCON said the facilities were granted to Arik for the purchase of additional aircraft and to refinance existing term loans, but the default in repayment by Arumemi-Ikhide, the principal promoter of Arik Air posed systematic threat to the banks and indeed Nigerian economy.

“As a matter of fact, apart from AMCON, Arik is also currently indebted to other commercial banks, including Standard Chartered, Zenith Bank, Ecobank and Access Bank to the tune of about N165 billion.

Arik owe the federal aviation agencies and regulators N26 billion $11 million is owed to European aviation agencies and service providers $20 million owed to Lufthansa Technique,” AMCON said.

The corporation explained that in September 2011, AMCON in a bid to provide further support to Arik restructured Arik’s debt from N85 billion to N70 billion as a nine-year term loan running at 12 per cent per annum.

According to AMCON, certain conditions were given to Arik Air for restructuring and these include that AMCON should appoint a resident monitoring Manager who shall have the authority to call for any of Arik’s records for examination and that Arik should provide three-year record of its remittances to the Federal Airports Authority of Nigeria (FAAN).

“In all of these, Arik defaulted on the term of the restructuring and failed to make the monthly repayment as agreed. Again in May 2013 AMCON sourced N26 billion of the Central Bank of Nigeria (CBN)/Power Aviation Intervention Fund (PAIF) through the Bank of Industry (BOI) on behalf of Arik. AMCON disbursed N21.38 billion of the BOI loan to Arik as working capital. Out of this amount, N21.4 billion was meant for reconfiguration of two aircraft from passenger to cargo carriers. This was never done as the funds were diverted by Arik management and is now the subject of EFCC investigation. Both aircraft were abandoned in the UK,” the statement explained.

The corporation said in December 2015, due to accrued interest and unpaid principal, a second restructuring was proposed for Arik debt to reduce the debt from N138 billion to N90 billion, but this restructuring was still waiting CBN approval.

“This was proposed based on Arik’s plan to do a private placement and subsequently do an IPO within a period of six months. Based on that, they were expecting N44 billion from Afrexim as a bridge. None of this happened, as Arik could not comply with any conditions given for a peaceful resolution.

”In spite of the leniency and good will and good faith demonstrated by AMCON to support an indigenous strategic business; Arik throughout the negotiations, refused or neglected to adhere to the terms of amicable settlement. However, AMCON continued to bear the burden of repaying the BOI loan at one percent interest rate without any corresponding commitment from Arik. So far, AMCON has paid N9.05 billion on behalf of Arik,” AMCON said in a statement.

It alleged that Arik vehemently refused to cooperate with the AMCON resident Monitoring Manager and also refused to disclose financial information to AMCON, adding, “all our investments in Arik, AMCON total recoveries from Arik till date is N4.6 billion, which is only 3.2 per cent of current exposure
. Total repayment by Arik in the last 12 months is N50 million,” AMCON alleged.

AMCON said it also acquired three other non-performing loans of companies in which the principal promoter of Arik Air, Arumemi-Ikhide has interest and these include Rockson Engineering – N107billion; Ojemai Farms Limited – N8.6billion; Ojemai Investment Limited – N1.9billion

“This made the total exposure of Johnson Arumemi-Ikhide to AMCON stand at a whooping N263.7 billion. With no credible plan or effort to repay, the Federal Government mandated AMCON to take over Arik Air after meeting all legal procedures to that effect.”

However, Arumei-Ikhide had earlier told THISDAY that the actual debt Arik owed the Corporation was N90 billion and according to him, AMCON management had acknowledged that N90 billion was the debt the airline owed the government agency and wondered where it got the extra N56 billion it added to the earlier debt, which both parties agreed on and endorsed.

Other debts he mentioned include debt owed Lufthansa Technic, a maintenance company that provides technical support to the airline, which is about $9.8 million, and the one owed Eurocontrol, which the he said was less than one million Euros.

The Arik Air chairman has insisted that the airline had been paying debts owed aviation agencies and noted that when there was a disagreement over the total amount owed FAAN, the agency took Arik to court, in a case that is still subsisting.

Arumemi-Ikhide had also said the crash of the naira in value made it extremely difficult to generate enough revenues in the local currency to offset overseas debts in dollars.

But AMCON said efforts are being made to stabilise the airline and expressed the hope that the indigenous carrier, which has the largest fleet in West Africa, would be revitalised.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button