- Ibru Family Pushing Hard to Buy Back Aero Contractors
The Ibru family has expressed its willingness to buy back Aero Contractors, which it lost to Asset Management Corporation of Nigeria (AMCON) owing to the airline’s huge indebtedness to banks.
A source with the aviation industry, who disclosed this said AMCON is willing to sell the airline to Ibru family or any other interested party at a good price.
The source also hinted that the federal government offered Arik Air, which was recently taken over by AMCON to two international airlines to buy, but the airlines declined.
Aero Contractors was initially owed by the Ibru family and CHC Helicopters of Canada. But CHC, some years ago, relinquished its stakes in the airline, leaving the Ibru family as sole owner.
The airline was taken over by AMCON when it could not offset the credit facility it secured from Oceanic Bank and later Ecobank, which absorbed the assets and liability of the defunct Oceanic bank.
Source inside Aero source that First Capital, which was appointed to oversee the sale of the airline hinted that about 18 companies from Nigeria and overseas have indicated interest to buy the airline. But the Ibru family is said to be making moves to buy back the airline and is willing to pay about 50 per cent of the total debts owed AMCON, which was put at about N35 billion.
“We have over 18 people that have indicated interest to buy Aero, but the Ibru family wants to settle. First Capital responsible for the sale said interested parties are coming from Nigeria and overseas and there are a lot of buyers. The Ibru family is willing to offer up to 50 percent of what the airline owed,” the source said.
The source said that right now AMCON has the controlling share of the airline and if the Ibru family after negotiation agrees to pay 50 percent of the debts; which means that it has merely offset part of the debts of the airline and this may not have anything to do with the shareholding, but with such payment, the shareholding could be renegotiated.
“If they pay there will be a restructure of the share capital, but AMCON will still own the capital but it will remove the receivership of the company, then the Ibru family can get an investor who will now buy AMCON shares. The initial debt (about N15 billion) owed AMCON was converted to shares; that is why the Corporation has controlling share, but the second debts amounts to about N20 billion and it is still there,” the source said.
Meanwhile, sources in aviation industry disclosed on Wednesday that the federal government had approached Ethiopia Airline and Turkish Airline to buy Arik Air but they declined.
Although we could not confirm why the two airlines declined the offer, sources said it may not be unconnected with the controversies surrounding the takeover of the airline.
Before the AMCON took over Arik Air last February, it was gathered that Ethiopia Airline would be giving the managing contract of the nation’s foremost airline, but Ethiopian Airlines Group CEO, Tewolde Gebremariam, told a local medium, The Reporter that the Nigerian government asked the help of his management to re-launch the national carrier of Nigeria (Arik).
“Recently, our team was in Nigeria because we have been requested by the government of Nigeria to support the reestablishment of their national airline”, he said.
Although he declined to disclose the details of the plan, saying the discussion was at an early stage, THISDAY gathered that the airline might be reluctant to acquiesce to the request of the federal government because “they don’t know who is in charge of Arik Air and who to deal with. Is it the Ministry of Transport or AMCON?”
Spokesman of AMCON Jude Nwauzor however said that the Corporation is willing to sell Aero to anyone willing to offer good price for the airline.
He said AMCON has spent money and it is still spending money on running cost to ensure the airline continues to operate.
“We are willing to sell Aero. We have been spending money on running cost of the airline; so if anybody offers us good money, we will sell it. We know that if Aero and Arik sell all their assets, they won’t be able to pay AMCON what it has spent on the two airlines,” Nwauzor said. Nwauzor however said he was not aware that anybody has indicated interest to buy either Aero or Arik.
The Drop in US Crude Oil Inventories Boosted Oil Prices on Wednesday
Crude oil prices rose on Wednesday following a decline in US crude inventories last week.
The American Petroleum Institute (API) had reported that United States crude oil inventories declined by 5.3 million barrels in the week ended January 22, 2021, more than a reduction of 430,000 barrels predicted by a Reuters poll.
The unexpected decline, coupled with slowing new COVID-19 cases in China, the world’s largest importer of crude oil, boosted oil prices on Wednesday.
Brent crude, against which Nigerian crude oil is measured, rose by 41 cents or 0.7 percent to $56.32 per barrel.
The U.S. West Texas Intermediate (WTI) crude oil also gained 56 cents or 1 percent to $53.17 a barrel.
“WTI is slightly firmer on the back of a larger-than-expected draw in US crude inventories reported by the API, which is offset by builds in gasoline and distillates,” said Vandana Hari, oil market analyst at Vanda Insights.
The data, however, showed petrol inventories grew by 3.1 million barrels in the week, more than experts projected.
Similarly, API data revealed that distillate fuel inventories that include diesel and heating oil, jumped by 1.4 million barrels, far higher than the 361,000 barrels decline predicted. However, refinery runs declined by 76,000 barrels per day.
“Market participants are now in ‘wait and see’ mode, wanting to see how lockdowns evolve in the coming weeks and months, and how successful countries are in rolling out Covid-19 vaccines,” ING economics said in a note.
COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020
Nigeria’s oil revenue declined by 41.44 percent in the first nine months of 2020 to $2.033 billion, according to the latest data from the Nigerian National Petroleum Corporation, NNPC.
This represents a decline of 41.44 percent from $3.47 billion filed in the same period of 2019 when there was no COVID-19.
In the September 2020 edition of NNPC’s Monthly Financial and Operations Report (MFOR), revenue from oil and gas rose by 16 percent to $120.49 million in the month of September, a 66 percent or $234.81 million drop from $355.3 million posted in the same month of 2019.
The global lockdowns caused by the COVID-19 pandemic plunged Nigeria’s crude oil sales and global demand for the commodity. This was further compounded by Nigeria’s high cost of production compared to Saudi Arabia, Russia and others that were offering discounts to boost sales during one of the most challenging periods in human history.
Experts like Prof. Yinka Omorogbe, President of Nigeria Association of Energy Economics, NAEE, were not surprised with the drop in earnings given the effect of COVID-19 on the world’s economy.
She, however, called for the revamp of the nation’s petroleum sector laws and diversification of the economy away from oil revenue dependence. She said “Covid-19 made 2020 a very hot year and it battered the oil industry internationally and we are not an exception; so we could not have been unaffected”.
She also said the effect of the fall “is definitely a wake-up call; we have to diversify, strengthen our other resources and capabilities”.
Omorogbe, a former NNPC Board Secretary, urged the government and the operators in the sector to look inward and think strategically, stating: “think medium term, think of where they want to be and the government, above all, must think of how best we can utilize our resources, so that we can achieve our objectives once we know and define them.
“It is a clear wake-up call, if not we will just sit here and find that we have become one of the poorest nations in the world”, she noted.
Crude Oil, Other Commodities Closing Price for Monday
Brent crude oil, Nigeria’s crude oil benchmark, gained 47 cents to $55.88 per barrel on Monday, while the US crude oil expanded by 50 cents to $52.77 per barrel.
Gold for February delivery fell $1 to $1,855.20 an ounce. Silver for March delivery fell 7 cents to $25.48 an ounce and March copper was little changed at $3.63 a pound.
The dollar fell to 103.80 Japanese yen from 103.83 yen. The euro fell to $1.2139 from $1.2167.
Wholesale gasoline for February delivery rose 1 cent to $1.56 a gallon. February heating oil rose 2 cents to $1.59 a gallon. February natural gas rose 16 cents to $2.60 per 1,000 cubic feet.
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