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NITEL: Transcorp borrows $75m from Union Bank

Posted by By Chijama Ogbu on 2006/07/19 | Views: 523 |

NITEL: Transcorp borrows $75m from Union Bank


There are strong indications that Transnational Corporation Limited has secured a loan of $75million from Union Bank of Nigeria Plc to pay the 10 per cent deposit it made for the purchase of.....

There are strong indications that Transnational Corporation Limited has secured a loan of $75million from Union Bank of Nigeria Plc to pay the 10 per cent deposit it made for the purchase of 75 per cent stake in Nigeria Telecommunications Limited.

A source told our correspondent that the corporation had approached UBN for the facility in a desperate bid to ensure that it secured the deal.

The source confirmed that the money, which was offered in its equivalent value in naira, was paid to the Bureau of Public Enterprises as initial 10 per cent deposit.

However, the Managing Director/ Chief Executive Officer of the bank, Mr. Bartholomew Ebong, while confirming that the corporation applied for a loan from the bank, told our correspondent on the phone on Monday that the facility was still being processed.

Our correspondent also learnt that Transcorp sought loans from some Nigerian banks, including UBA, Zenith and First Bank of Nigeria, whose managing directors are also directors of the corporation.

It is, however, not clear whether the banks are willing to grant the corporation the loan it required.

A similar loan granted by First Bank to finance the Investors International London Limited, a special vehicle floated by investors to buy NITEL during the initial effort to sell the parastatal, turned bad when the money was forfeited to the Federal Government.

This was due to the inability of IILL to pay the full value of $1.3billion. The development led to the removal of Mr. Bernard Longe as the Managing Director/ Chief Executive Officer of the bank.

However, analysts believe that Transcorp offers a better deal as it has got enough assets to provide a hedge for the loans in case it fails to meet payment terms.

Besides, it is not clear whether it is a non-refundable deposit, as it is not explicitly stated as was the case in the IILL deal.

Our correspondent learnt that UBN, incidentally, was the financial adviser to another investor, FT Networks, shortlisted for the NITEL shares.

FT Networks, it was learnt, made a bid of $602million for 51 per cent shares in NITEL.

The investment group, it was further gathered, has the backing of international financial institutions led by Basic International Development Corporation based in New York, which made written commitments to President Olusegun Obasanjo and the BPE to pay immediately if FT Networks was chosen as the preferred bidder.

It was learnt that Transcorp’s original plan was to make a bid of $500million for the 51 per cent shares in NITEL but it was forced to raise the stake to $750million because of FT Networks’ bid.

The BPE team, it was also learnt, had insisted that it would be inexplicable to Nigerians that they shunned a bid of $602million to settle for $500million.

In the course of the negotiation, our correspondent was told, the BPE had to seek approval from the Presidency to increase the stake on offer to 75 per cent in order to attract a bid that would appear on face value to the higher bid by FT Networks.

When contacted, the Executive Director of Transcorp, Mr. Nick Okoye, on Monday night, refused to speak but referred our correspondent to Transcorp’s corporate communications officer, Mr. Adebayo whose telephone number he gave as 01-4716259.

When our correspondent called the number on Tuesday, a voice said he was out of town and was not ready to link him to anybody that could speak on the deal

The BPE had on July 3, announced the sale of 75 per cent stock in NITEL and its mobile subsidiary, M-tel Nigeria Limited, to Transcorp for $750million.

The company was given seven days to pay the first $500million of the price of the enterprise.

Under the arrangement, the rest of the money must be paid within 60 working days.

But the deadline expired last Thursday without the corporation being able to make the required payment.

Instead, it had, five hours after the deadline expired, paid $75million and asked for more time to sort out some issues in the Share Purchase Agreement.

The $75million payment represents 10 per cent of the price agreed to by both the BPE and the corporation and 15 per cent of the required $500 million initial payment.

Although Transcorp was originally required to pay the money in the New York branch of the Standard Chartered Bank, it paid the $75million via a draft brought to the BPE on Thursday night.

The spokesman for the BPE, Mr. Joe Anichebe, had said last Friday that the BPE had referred to the National Council on Privatisation on Transcorp’s request for time extension.

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Fay(Katy, Texas, US)says...

Actually translates to bravehearted.