Some Nigerian firms are spending more on costs than generating revenue, a situation that calls for urgent restructuring to avoid a collapse of the Business or its viability as a going concern.
In another example, Tourist Company of Nigeria (TCN), the company in the hotel, Hospitality and tourist business, had operating expenses eclipse its entire revenue, leaving it in an unavoidable loss position.
Tourist Company of Nigeria, in the six month period ended December 2015, had operating expenses of N1.63 billion, swallow sales of N1.61 billion, resulting in operating losses of N24.05 million.
The company also recorded a loss after tax of N307.01 million.
It is not surprising that the shares of the company have never been attractive as it has been stagnant at N3.51 since March 2014 to date.
Its one year return on NSE has always been nil, which means the company, has never been a good buy.
TCN has always been enmeshed in immense board room squabbles and family war over its indebtedness and ability to continue in the foreseeable future. Some directors like Maiden Ibru, on behalf of Omamo Investments Corporation owned by her late husband, sought to liquidate Tourist Company on allegations of indebtedness and financial recklessness.
Ibru alleged that Omamo Investments Corporation between 2003 and 2009 lent Tourist Company $7.1m, N610m, N381m and N19m, which the company had been unable to refund.
News continues after this ad
Goodie Minabo Ibru, one of the Ibru brothers was fired by the shareholders of Ikeja Hotels, who also own Sheraton Hotels Ikeja , Sheraton Hotels, Abuja and Capital Hotels, among others.
The Economic and Financial Crimes Commission (EFCC), in January of 2016,launched a probe into the initial investment by South African hotel and gaming group Sun International, in TCN, a worrying development that puts the hospitality giant in a more precarious situation.
TCN was incorporated on 10 April 1964, with its share capital wholly-owned by the Federal Government of Nigeria, to acquire the Federal Palace Hotel. In 1992, Ikeja Hotel Plc in association with other investors (collectively the “Ikeja Hotel Group”), acquired all the shares of the Company from the Federal Government.