• Wants Bond issued on liabilities
By CHINENYE OKOYE
Wednesday, October 13, 2010
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President Goodluck Jonathan has approved the planned sale of Nigerian Telecommunications Limited (NITEL), reviving a process which had been stalled over doubts about the financing behind a preferred $2.5 billion bid.
Equally the Debt Management office (DMO) has been authorised to issue bond to offset the backlog of NITEL staff laibilities.
The Ministry of Finance has been directed to raise the amounts immediately. The bonds will be subsequently redeemed from the proceeds of the sale of the twin corporate units of the company.
The Bureau of Public Enterprises (BPE) said on Tuesday that a committee set up to probe the planned sale found the transaction complied with due process.
It said the preferred bidder the New Generation consortium, which includes China Unicom Dubai Company Minerva and local firm GiCell — would now be asked to pay $750 million in bid security to secure an offer letter.
The balance $1.75 million should be paid within 60 days of receipt of the offer letter, BPE stated. Nigeria has been trying to sell NITEL and its mobile arm, M-tel for almost a decade and this latest effort has been marred by controversy.
This is coming after the Federal Government earlier ceded 6.67 per cent equity in the corporation to Investors International of London Limited (IILL). IILL, a special purpose vehicle formed in 2001 for the purpose of acquiring controlling shares in the first national telecom operator, had lost about $131.7m to the Federal Government in its failed acquisition bid for NITEL.
The ceding of 6.67 per cent equity to IILL has brought to 21.67 the percentage that the Federal Government has ceded recently, following a similar exercise that saw the Nigerian Communications Satellite Limited getting 15 per cent equity for NITEL.
This leaves the government with 27.33 per cent equity in the company after it had earlier sold 51 per cent stake to the current majority stakeholder, Transnational Corporation, in 2006 for $500m.
From the remaining stock, the Federal Government is expected to cede another 24 per cent to a new core investor, who will acquire majority stake in a new deal being handled by the Bureau of Public Enterprises.
Transcorp is also expected to contribute 27 per cent shares to ensure that the new stakeholder acquires 51 per cent controlling equity. The Federal Government and Transcorp has reached a compromise to ensure that Transcorp gives BPE the power of attorney to sell part of its shares.
If Transcorp signs off part of its shares, it will be left with 24 per cent holding in NITEL and its mobile subsidiary, the Nigerian Mobile Telecommunications Limited.
The Federal Government, on the other hand, will be left with 3.33 per cent equity in the company. Even this will be held in trust for workers of the company, who are expected to acquire five per cent of government’s 49 per cent equity.
IILL had bid $1.317bn to acquire 51 per cent stake in NITEL and M-Tel on November 28, 2001. It proceeded to pay 10 per cent deposit of the bid sum amounting to $131.7m to BPE.
However, it could not complete the payment of the balance when it fell due in February 2002. This prompted the Federal Government to seize the $131.7m deposit.
While the company made attempt to recover its deposit, the then Managing Director of First Bank of Nigeria Plc, Mr. Bernard Longe, lost his job because the bank, under his watch, had lent the $131.7m deposit to IILL, allegedly without adequate security.
IILL eventually approached the International Arbitration Panel, which asked the Federal Government to deduct the expenses it had made in the process of the transaction and allocate the balance to the company.
With NITEL going in bits to companies that may not have the financial capacity to revitalise it, experts fear that the company could end in the hands of incongruent and incompetent partners except a very strong operator emerged in the ongoing resale process.
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