AMCON raises alarm over N4 trillion debt

 

AMCON raises alarm over N4 trillion debt

 

.....Says Arik Air owes N445 billion as options for liquidation on the table 

The Asset Management Corporation of Nigeria (AMCON), yesterday raised the alarm over the humongous debt totalling N4  trillion it is owed by organisations as non performing loans it inherited from from Nigerian banks saying it will utilize every legitimate instrument at its disposal to recover the monies from companies, including Arik Air and others, which have refused to pay back.

The intervention institution said failure to recover such funds from the non - complying debtors could deal a deadly blow on Nigeria;s financial system.

Speaking at a briefing in Lagos, Head of AMCON's Corporate Communications Unit, Mr Jude Nwauozor said some institutions such as Arik Air and about 12, 000 others have demonstrated resistance in paying the monies they took from banks to support their business at inception.

  He said the task of recovering the money has been arduous and challenging. He said : " While several thousands of Nigerians and Nigerian companies have honoured their obligations, AMCON continues to face resistance from a number of debtors who are unwilling to pay without a fight. One of these debtors is Arik Air Limited (in Receivership), an airline company owned by Sir Johnson Arumemi-Ikhide, who is also the promoter of Rockson Nigeria Limited (a power infrastructure company), Ojeimai Farms Limited, and Ojemai Investment Limited. These companies' debts were transferred by various banks to AMCON due to their non-performance, with a total indebtedness of N455, 171, 764, 772.80 billion as at December 31, 2024.

"Arik owes AMCON N227,637,469,394.34 billion; Rockson Engineering N163,502, 837, 397.75billion and Ojemai Farms N14, 031, 457, 980.71 billion. "The fact of the matter is that no matter the smear campaign he is sponsoring against AMCON, these debts must be recovered one way or the other. The leadership of AMCON knows that there is no nice way of recovering debt. For that, obligors go to any length to assassinate the characters of both AMCON staff and Management, they malign the name of AMCON, intimidate, and harass our personnel with every arsenal at their disposal. 

"If at sunset AMCON is unable to recover the huge debt of over N4 trillion, it becomes the debt of the Federal Government of Nigeria for which taxpayers’ monies will be used to settle. 

"The implication is that the general public will be made to pay for the recklessness of only a few individuals who continue to take advantage of the loopholes in our laws to escape their moral and legal obligations to repay their debts."

AMCON) said the  option to liquidate Arik Air is still on the table following several efforts it has made to revive the airline.

 AMCON, said the AMCON Act, in Section 6 empowers the corporation to purchase, manage, and dispose of EBAs, which include Arik.

Nwauzor also noted that section 48 empowers the corporation to appoint a Receiver or Receiver Manager to take, manage, and dispose of assets of a debtor company like Arik.
He said considering the powers that AMCON possesses according to the law, liquidating Arik Air remains an option for it.
He said Arik was managed in its bad state and already insolvent, without any kobo from anyone by the corporation, adding that the Corporation met trade creditors to Arik debt, debt to its technical partners, and debt to other aviation experts all over the world.
” Managing these debts was challenging for the corporation, which still can liquidate Arik. But here we are still managing Arik, which was already insolvent and still insolvent even as we discussed,” Nwauzor said.
He said a KPMG report commissioned by AMCON revealed that Arik was balance-sheet insolvent, with a negative equity value of approximately ₦80 billion and total liabilities amounting to ₦289 billion as of December 31, 2016.
Additionally, PwC Nigeria, the company’s long-standing auditors (previously appointed by Johnson Arumemi-Ikhide), conducted audits for the years 2015 and 2016, he said.
These audits, he noted, confirmed that Arik had been technically insolvent since 2014, with its liabilities exceeding its assets throughout 2015 and 2016, up until the commencement of the receivership in 2017.
“As of December 2016, Arik’s negative shareholder capital stood at ₦139 billion, nearly equivalent to its debt to AMCON,” Nwauzor added.
He said amongst several inaccurate claims,  Johnson Arumemi-Ikhide, the founder of Arik, has consistently peddled a false narrative regarding his debt to AMCON, claiming that Arik never defaulted in its payment obligations to Union Bank and feigning ignorance of the debt owed to AMCON.
Nwauzor said Arumemi-Ikhide has also alleged that the receivership was premature and claimed his loan was performing.
“These claims are misleading. The intelligent public must ask, if the loan was performing, why was it sold and restructured? And why did he agree to the restructuring? Did he fulfil the agreed terms?
“The decision to classify the loan as non-performing and to sell it was made by Union Bank of Nigeria PLC (UBN), by the Prudential Guidelines set by the Central Bank of Nigeria (CBN). Union Bank willingly offered the Arik loans to AMCON, which purchased the loans in compliance with the law.
“In a letter dated October 22, 2010, UBN informed Arik that its loans, which amounted to a staggering $474 million (approximately ₦70 billion at the time), were non-performing and posed a threat to the bank’s stability. This loan exposure was a significant factor in Union Bank’s financial challenges.
“It is important to note that beyond Union Bank, Arik’s loans were also sold to AMCON by Bank PHB (now Keystone Bank), and  Arumemi-Ikhide has, on several occasions, admitted to this indebtedness,” he disclosed.
He further explained that following the purchase of the loans, Arumemi-Ikhide willingly agreed to restructure the loans, acknowledging the debt.
“In any event, any challenge of the purchase of the NPLs by AMCON is statute-barred and there are provisions within the AMCON Act demonstrating that there is no valid cause of action that may arise from such a challenge.
“In any event, from 2011 to 2017, AMCON engaged in prolonged negotiations with Arik’s management (who never questioned the NPLs), but despite several financial accommodations, debt reduction offers, and restructuring efforts, Arik consistently defaulted on its obligations. AMCON was left with no choice but to consider various recovery options,” he said.

Asset Management Corporation of Nigeria (AMCON) has listed the number, location and status of Arik Air’s serviceable and unserviceable aircraft scattered across the world.

The corporation said it was important to disclose the following claims made by some parties including claims made by Johnson Arumemi-Ikhide, founder of Arik Air, that the airline had 30 aircraft when AMCON took over its management.
Nwauzor said not less than 21 aircraft belonging to  Arik Air were unserviceable and scattered across the world at the time AMCON took over Arik Air in 2017 due to the airline’s debt.
According to him, out of 30 aircraft purchased by Arik, only nine were active at the time it started managing the airline.
According to a document made available by AMCON, 21 Arik Air aircraft were not available for service upon AMCON’s takeover in 2017 and countries where the aircraft were kept.
They include 5N-MJA, B737-300 (Abandoned in Norwich, UK);  5N-MJB, B737-300 (Abandoned in Southend, UK) 5N-MJC, B737-700 (Extensively cannibalized in Lagos); 5N-MJD, B737-700 (Extensively cannibalized in Lagos); 5N-MJG, B737-700 (Required spare parts to return to service); 5N-MJI, B737-700 (Abandoned in Malta);  5N-MJO, B737-800 (One engine was unserviceable due to excessive oil leak);  5N-MJP, B737-800 (Abandoned in Johannesburg, South Africa); 5N-MJQ, B737-800 (Abandoned in Malta).
Other aircraft include 5N-BKU, Q400 (Required spare parts to return to service);  5N-BKV, Q400 (Extensively cannibalized in Lagos);  5N-BKW, Q400 (Required spare parts to return to service); 5N-JEA, CRJ900 (Required spare parts to return to service);  5N-JEB, CRJ900 (Required spare parts to return to service); 5N-JEC, CRJ900 (Extensively cannibalized in Lagos);  5N-JIC, A330-200 (Unserviceable in Perpignan, France); 5N-JID, A330-200 (Unserviceable in Lagos);  5N-JMA, HS800XP (Abandoned in Chester, UK);  5N-JMB, HS800XP (Unserviceable in Lagos); CS-TFW, A340-500 (Extensively cannibalized in Lagos) and CS-TFX, A340-500 (Seized and operated by HiFly in Portugal).
According to the documents, the aircraft remaining in Arik’s Inventory as of August 31, 2024, are 16.
Listed below are these aircraft including location and status: Q400, 5N-BKX located in Lagos and Serviceable; Q400, 5N-BKW located in Lagos and serviceable; B737-700 in Addisbans Serviceable (C-Check Ongoing); B737-800 in Lagos and serviceable; Q400, 5N-BKV in Lagos but Long-Term Storage (Scrap); Q400 5N-BKU in Lagos preparing for base check; CRJ900, 5N-JEC in Lagos but Long-Term Storage (Scrap); CRJ900 5N-JED in Lagos, Long-Term Storage (Scrap); and B737-700, 5N-MJJ in Long-Term Storage.
Others include B737-700, 5N-MJK and in long-term storage; B737-700, 5N-MJD in  Lagos, in long-term Storage (About to be repossessed by the bank); B737-700, 5N-MJC, in Lagos and long-term storage (About to be repossessed by the bank); B737-700, 5N-MJH in Addis under base check (85 per cent); B737-800, 5N-MJP in Johannesburg, under base check; A340, CS-TFW in Lagos under long-term storage (Scrap) and  A340 CS-TFX in Tabres HSBC under long-term storage (Scrap).