Central Bank of Nigeria (CBN) and Asset Management Corporation of Nigeria (AMCON) on the N275 billion debts of Zenon oil, Seawolf and Geometric, whose directors were included on the list of those barred from accessing loan facilities from banks.
AMCON had last year regarded the loans by the three companies as ‘performing’, but took them over from the banks due to what it described as their possible ‘systemic risk’.

Some analysts told BusinessDay yesterday that the inclusion last week , of the three companies and their directors, on the list of those barred from accessing loan facilities, as well as the tone of the circular from the Central Bank of Nigeria (CBN) which admitted that the loans were not being serviced, seems contradictory, and raises more concerns for the investing public.

To them, it was an indication that the previously issued loans were not performing, contrary to AMCON’s insistence that they were indeed performing.

However, Mustafa Chike-Obi, AMCON managing director, told Business Day at the weekend, that while Geometric’s loan was performing and therefore should not have been included on the list, a settlement agreement plan had been reached by both Zenon and AMCON, which would be presented to the board of the corporation for approval on Thursday. Chike-Obi further said discussions were going on between Seawolf and AMCON.

The CBN stated that the restriction would apply to individuals, organisations, companies, as well as principal shareholders and directors of companies where the outstanding value of loans purchased by AMCON amounted to N5 billion or above, as at the day of purchase, without regard to the actual amount paid by AMCON.

For Zenon Petroleum, owned by Femi Otedola, whose initial debt of N192.423 billion was priced by AMCON at N140.999 billion, the memo showed that “negotiations are ongoing and with fairly clear roadmap”.
Geometrics Engineering, owned by Barth Nnaji - N19.76 billion and Seawolf’s debt of N98.328 billion, which AMCON priced at N88.496 billion, were explained as “negotiations ongoing”.

CBN’s circular released on its website at the weekend, said:
“It has become necessary to stop debtors who failed to repay their loans to banks, and had these loans subsequently transferred to the Asset Management Corporation of Nigeria (AMCON) from further enjoying credit facilities from Deposit Money Banks (DMBs), until they fully repay agreed outstandings to AMCON.”

Mustafa Chike-Obi, AMCON managing director, had said last year, that the need to forestall any likelihood of further crisis in the banking industry, and the fact that large sums were involved, with the possibility of posing potential systemic risk, made AMCON to compel the banks to purchase the loans of Zenon Petroleum of N150 billion, with about five banks involved; Seawolf Industries (First Bank), N100 billion and Geometric Power Industries (Diamond Bank) worth N25 billion, from the balance sheet of the banks.

According to analysts at Renaissance Capital (Rencap), which gave the analysis of the Zenon loans, “Zenith, UBA, GTBank, FCMB and Access banks have on average, about 16% of their capital and 6% of their gross loan books exposed to Zenon Petroleum & Gas Limited. The cumulative exposure of these banks is $1.1bn and it is not a syndicated facility.”

The analysts are saying that the list has confirmed their fears that the reasons advanced for the takeover were not convincing enough, even after the banks flouted the single obligor limit, arguing that what the banks needed to do after venturing into such large exposures, was to syndicate the loans to other banks, thereby spreading the risks.

Besides, they argued that rather than forestalling the potential risks, the action was aimed at shielding some personalities who own the firms, and also protecting the banks.

They queried why AMCON was still insisting that the loans were performing, when some of the projects for which the facilities were gotten had not commenced operations, as to commence servicing the loans, and also the fact that issues surrounding some of the facilities were in the public domain and in some cases, subject to judicial interpretation.

Chike-Obi said about Zenon, “There is a settlement agreement at restructuring the loans that will be presented for the board’s approval on September 29, and if that is approved, then that will be settled.”

For Geometric, “There is a correction to be made. Geometric loan is performing and the name should not have been there.” Sea wolf, “We are discussing.”
Chike-Obi insisted that there was a possibility that loans that were performing before they were taken over by AMCON, could have gone bad by now. “Are you saying that there is no possibility that loans that were performing that time, could have gone bad by now?” he queried.

Reading this, I sense Sanusi is out on his witch-hunt again. Did CBN (read Sanusi) consult with AMCON before coming up with his list? Otherwise why are companies and individual whose loans are performing doing in the barred list?

My sixth sense tell me, Sanusi moves was geared towards frustrating certain individual from participating in the power sector privatization. I think his motive is anything but altruistic.