The Managing Director of Asset Management Corporation of Nigeria (AMCON), Ahmed Kuru, on Wednesday informed the Senate of reason why it took over Arik Air saying that out of over N352.5 billion debt owed by Arik Air over N147 billion belonged to AMCON.
Kuru, who spoke at the Senate committee hearing on Banking and Financial Institutions explained that in line with AMCON’s statutory mandate, the non-performing loans of Arik Air were acquired in 2011 from two distressed banks.
Ahmed Kuru explained that the facilities were granted to Arik Air for the purchase of additional aircraft and to refinance existing term loans saying the default in repayment of the loan posed systemic threat to the banks and the Nigerian economy.
According to him the principal promoter of Arik Air Sir Johnson Arumemi-Ikhide, apart from owing AMCON, Arik is also currently indebted to other “commercial banks to the tune of N165 billion.
“N26 billion is owed to the Federal aviation agencies and regulations. $11 million is owed to European aviation agencies and service providers. $20 million owed Lufthansa Technique.
“AMCON also acquired three other non-performing loans of companies in which the principal promoter is Sir Johnson Arumemi-Ikhide. They incude: Rockson Engineering, N107 billion; Ojemai Farms Limited, N8.6 billion and Ojemai Investment Limited, N1.9billion. Total exposure of Sir Arumemi-Ikhide to AMCON is N263. 7 billion.
“In September 2011, AMCON restructured Arik’s debt from N85 billion to N70 billion as a nine-year term loan running at 12 per cent per annum,” he said.
He added that AMCON appointed a resident Monitoring Manager who has the authority to call for any of Arik’s records for examination and also to provide a three-year record of its remittances to FAAN.
He explained further that Arik Air defaulted on the term of the restructure and failed to make the monthly repayment as agreed adding that in May 2013 AMCON sourced N26 billion of the CBN/PAIF through Bank of Industry on behalf of Arik and disbursed N21.38billion of the BoI loan to Arik as working capital.
He added that “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.”
Based on Arik’s plan to do a private placement and subsequently do an IPO within a period of six months, he added that they were expecting N44 billion from Afrexim as a bridge “but none of this he said happened as Arik could not comply to any conditions given to them.”
According to him “AMCON continued to bear the burden of repaying the B01 loan at one per cent interest rate without any corresponding commitment from Arik. So far AMCON has paid N9.05 billion on behalf of Arik inspite of this Arik refused to cooperate with the AMCON resident Monitoring Manager and refused to disclose financial information to AMCON.
“Total recoveries from Arik till date is N4.6 billion (only 3.2% of current exposure). Total repayment by Arik in last 12 months was N50 million only. As at December 2016, Arik’s debt in AMCON stood at N146 billion due to mounting interests and unpaid principal.
“The consolidated exposure of debtor companies in which Sir John Arumemi-Ikhide is the principal promoter in AMCON stands at N263.7 billion. This figure excludes Arik’s indebtedness to other banks, aviation authorities (local and foreign), vendors, contractors and workers. The consolidated exposure of debtor companies in which Sir John Arumemi-Ikhide is the principal promoter in AMCON stands at N263.7 billion.
“These figures exclude Arik’s indebtedness to other banks, aviation authorities (local and foreign), vendors, contractors and workers.
Arik has about 30 aircraft, the largest fleet in Nigeria, Holds approximately 55 to 60 per cent of the air transport market in Nigeria. Serves 18 domestic and 11 international destinations, including Johannesburg, London, Dubai, and New York City and has Estimated revenue at N7 billion monthly.
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