FACTS ON THE TRANCORP LOAN POSITION WITH ITS BANKERS

FACTS ON THE TRANSCORP LOAN POSITION WITH ITS BANKERS

 

The listing of Transcorp Plc among organisations allegedly in breach of financial regulations through non-performing loans by the Central Bank of Nigeria has excited interest in a broad section of Nigerians and the international community. There is a need, however, to provide stakeholders of the company and persons interested in the best interest of Nigeria with accurate facts and proper perspective on the issue of Transcorp’s loan relationship with its bankers.

 

 

1.      Transnational Corporation of Nigeria was incorporated in 2005 to serve the national interest by engaging in large-scale ventures akin to the Asian Tigers.

 

2.      After three failed attempts by the Bureau of Public Enterprise/Federal Government to sell NITEL in 2006, the Federal Government keenly encouraged Transcorp and two other Nigerian companies to save the country from the embarrassing $257m bid from Orascom of Egypt by going into a negotiating bidding process. Transcorp won and paid US$500m for NITEL/MTEL instead of US$257million.

 

3.      In accordance with a Board Resolution, Transcorp borrowed US$500 form a consortium of banks in 2006 and paid the BPE/Federal Government for 51% stake in Nitel/Mtel with the Government holding 49% stake in both companies.

 

4.      The loan was partly repaid from the proceeds of Transcorp’s Initial Public Offering/IPO); n22billion was raised from the IPO out of which Transcorp paid n19billion to the banks that financed the Nitel/Mtel acquisition, N2billion went straight for resuscitation of Nitel/Mtel operations and N1billion was retained for monthly servicing of the loan.

 

5.      Due to continued political undertones form Nitel’s co-owner, Transcorp was not allowed to take control of Nitel/Mtel until June 2008, these being the only laggards in the portfolio of Transcorp. This situation meant that Transcorp could not generate income needed to offset the outstanding liabilities; neither could it take bold decisions necessary to put the company on a sound financial footing.

 

6.      As a result, in February 2009, the three hundred and ten thousand (310,000) shareholders of Transcorp passed a unanimous resolution at an Extra Ordinary Meeting in Abuja mandating the Board of Directors to sell Transcorp’s 51% equity in Nitel/Mtel in order to liquidate the bank loan.

 

7.      Since then, the Board has been prompting Government via NCP/BPE to speed up the joint sale of NITEL/MTEL by Government and Transcorp in order to settle the balance of the loan. The Federal Government set up a committee to handle this matter but there has been no discernible progress on their part since the committee was set up in October 2008; neither has Government paid back to Transcorp its 51% stake since the Federal Government announced revocation of the sale of Nitel/Mtel.

 

8.      Transcorp ha s noted attempts to personalise the matter of its outstanding liabilities to the banks by ascribing it to the person of the chairman, Prof. Ndi Okereke-Onyiuke and thereby impugn her integrity. For the avoidance of doubt, Prof. Ndi Okereke-Onyiuke serves as non-executive Chairman of Transcorp on a national assignment by the Federal Government and with the approval of her employers, the Council of the Nigerian Stock Exchange.

 

9.      From the foregoing, it should be clear to every dispassionate and objective observer that Transcorp is committed to best practise in banker-customer relationship as evident in its previous loan repayment, and would continue to do so give an enabling environment. Besides, representatives of three of the five lender banks serve on the Board of Transcorp to protect the interest of their banks.

 

 

Signed

Management

Transcorp plc

Sunday, August 23, 2009

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