Connect with us
nairametrics
UBA ads

Companies

Teleology’s plans for 9Mobile looks like a leverage buyout

Published

on

Photo by Alice Pasqual on Unsplash

Teleology Holdings has moved one step closer to taking over embattled GSM operator 9Mobile. Reports by Thisday, state the company has paid the $50 million non-refundable deposit (Thisday seems to get all the scoops on Teleology).

According to the report, Adrian Wood, a key promoter at Teleology revealed the progress that has been made so far and plans going forward for the telco. Teleology is expected to pay $500 million balance.

UBA ADS

Good news for the banks

Adrian Wood, who will take over as Chief Executive Officer (CEO) also confirmed that the firm had signed a Loan Purchase Agreement. This means Teleology will take over the repayment of the loan.

With the execution of the Loan Purchase Agreement, Teleology will take over the loans of the 13 banks from 9mobile in exchange for a payment plan.This means that 9mobile will have no loans on its books and no longer owes the banks since Teleology has assumed the loans.

Leverage buyout?

Wood also disclosed that half of the loan will be repaid after its takeover of 9Mobile and the rest in tranches. This suggests this might be a leverage buyout type takeover. Leverage Buyouts occurs when an investor acquires a target using debt funding, loads the debt on the target’s balance sheet and using the cash flows from the target to repay the debts.

It is not entirely allowed in Nigeria, however, there are ways of achieving this. To do this, the strategic investor leaves the loans on its own balance sheet but uses the cash from the target company (acquired entity) to repay the loan. The acquired company then records the cash collected from its revenues as an intercompany loan against its parent company.

GTBank 728 x 90

This structure often times kicks the can down the road as it relies solely on cost-cutting and better operational efficiency to squeeze out cash from the acquired company. The objective is to build up equity valuation ahead of an eventually raise which will now be used to pay down the debt. However, if things go south, sooner than they raise equity, the problems we had in the former Etisalat might resurface.

How did Teleology raise funds?

Funds for the takeover are being provided by Afrexim Bank and UBS. UBS is sourcing funds from a consortium of local and foreign banks.

As earlier mention, this suggests that Teleology has no equity, and would be relying on 9Mobile’s cash flows to service the debt. This could be a worthwhile strategy if this was a prequel to an equity raise. For the Nigerian banks involved, this would be a means of spreading risk.

Deal book 300 x 250
onebank728 x 90

Who is behind Teleology?

Perhaps to assuage fears the company was a shell corporation incorporated, Woods also stated that Teleology’s shareholders would be revealed after the takeover had been concluded. Several of them are Nigerians.

Going Forward

Concerning management, Woods also mentioned that several of his ex-colleagues at MTN would come on board.

 

app

“We have 12 executives coming in and they comprise five of my former colleagues at MTN such as the ex-CTO and ex-CFO. Others include executives from Orange, Vodafone, Celtel and others.”

9Mobile’s (then known as Etisalat Nigeria) woes began when it defaulted on a $1.2 billion loan provided by a consortium of Nigerian Banks. Parent company Etisalat of the UAE exited the firm, and the banks threatened to take over.

They were however restrained by the Nigerian Communications Commission and the Central Bank of Nigeria (CBN), which formed an interim board. Some of the affected banks have since made provisions on the loan.

Barclays Africa then midwifed a bidding process for Etisalat of the UAE’s stake. This has however had some of the controversies as some of the bidders alleged the process was filled with irregularities. Parties familiar with the bid process, however, denied this.

devland

Patricia

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via [email protected]

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Companies

Deap Capital Management & Trust Plc reacts to ‘rumoured’ AMCON takeover

AMCON had dragged the company before a Court in a bid to recover the debt.

Published

on

Deap Capital Management & Trust Plc

Deap Capital Management & Trust Plc has reacted to media reports about the supposed takeover of its assets by the Asset Management Company of Nigeria, AMCON.

In a statement that was signed by the Company Secretary, Yetunde Fashesin-Sousa, Deap Capital admitted that it is indebted to AMCON to the tune of N1.6 billion. It was also confirmed that AMCON owns a 20% equity stake in the fund management firm.

UBA ADS

Note that the indebtedness arose after AMCON took over ownership of certain banks. Apparently, these are banks that Deap Capital originally owed. However, following the transfer of the unnamed banks’ assets to AMCON, the debts were also transferred alongside.

Meanwhile, AMCON had dragged the company before the Federal High Court in Lagos in a bid to recover the debt. A ruling on the case, which was delivered on January 28 by the Hon Justice John Terhemba Tsoho, was in AMCON’s favour.

Following the ruling, AMCON began the process of recovering the debt from Deap Capital Management & Trust Plc. The company said it has been cooperating in this regard by working towards repaying the debt.

GTBank 728 x 90

The company also clarified that the assets that were taken over by AMCON belonged to its former directors whose names were not mentioned. Nairametrics could not verify if these directors are among those who were recently reinstated by the Securities and Exchange Commission, SEC. But we do know that AMCON had obtained a court order to attach the ‘former directors’ assets’ in its attempt to recover the N1.6 billion debt.

In the meantime, Deap Capital Management & Trust Plc said it is committed to resolving its operational challenges, including the recovery of its operational license and profitability issues.  The company’s latest earnings report (for its Q1 period ended December 31st, 2019) showed a total income of N1 billion. There was also a N6.3 million loss for the period under review.

Deap Capital’s stock opened today’s trading session on the Nigerian Stock Exchange with a share price of N0.30. Year to date, the stock has declined by some -18%.

Deal book 300 x 250
onebank728 x 90

Patricia
Continue Reading

Companies

Lafarge Africa Plc. announces its board meeting and closed period for Q2 2020 

The notification which was duly signed by General Counsel & Company Secretary.

Published

on

Lafarge Africa

Lafarge Africa Plc. notified the Nigerian Stock Exchange and the investing public that he closed period will commence on Wednesday, 8th July 2020 until the unaudited financial statement for the second quarter ended 30th June 2020, is released to the Nigerian Stock Exchange. 

In a disclosure on the Nigerian Stock Exchange, it wrote: “We hereby notify the Nigerian Stock Exchange and the investing public that a meeting of the Board of Directors of Lafarge Africa Plc has been scheduled to hold on Thursday, 23rd July 2020 to consider the second quarter financial results of the Company for the quarter ended 30th June 2020.”  

UBA ADS

Download the Nairametrics News App

The notification which was duly signed by General Counsel & Company Secretary, Mrs. Adewunmi Alode explained further stating that “Accordingly, no Director, employee, persons discharging managerial responsibility and Advisers of the Company and their connected persons may directly or indirectly deal in the shares of the Company in any manner during the closed period.” 

Over the past few months, it made a few board changes with the retirement of two of its Non-Executive Directors, as well as the appointment of three new DirectorsIt had also spun off its South African subsidiary, Lafarge South Africa Holdings (LSAH), last year. 

GTBank 728 x 90

READ MORE: NSE’s statement in reaction to the Visionscape Municipality Bond Default

Lafarge Africa’s Q1 2020 revenue was up 9.8% year-on-year to N63.7 billion, driven by higher Cement Sales (a figure up 11% year-on-year to N62.3 billion) which offset the weakness in Aggregate and Concrete (down 21% y/y to N1.4bn). Its EBITDA grew by 2.4% year-on-year to N19.3 billion as well. As at Tuesday the 7th of July, the share price of the company was N10.00 

 

Deal book 300 x 250
onebank728 x 90

Patricia
Continue Reading

Companies

AXA Mansard Insurance Plc gives notice of Annual General Meeting 

The AGM will be live-streamed to enable shareholders and stakeholders participate.

Published

on

AXA Mansard Insurance Plc

Insurance firm, AXA Mansard Insurance Plc., has given notice of its board of its Annual General Meeting (AGM) scheduled for Wednesday, July 29, 2020, at 10:00 a.m.  

The announcement which was disclosed by Nigerian Stock Exchange (NSE) in a corporate disclosure on July 7th, 2020 and signed by Company Secretary, Omowunmi Mabel Adewusi read, “Notice is hereby given that the twenty-eighth annual general meeting of AXA Mansard Insurance Plc. will hold at the Oriental Hotel, no. 3, Lekki Road, Victoria Island, Lagos on Wednesday, July 29, 2020, at 10:00 a.m.” 

UBA ADS

READ ALSO: AXA Mansard divests from its pension and real estate ventures

As noted, the purpose of the AGM is to transact the following business: 

  1. To receive the Audited Financial Statements for the year ended December 31, 2019, and the Reports of the Directors, Auditors and Statutory Audit Committee thereon 
  2. To authorise Directors to fix the remuneration of the Auditors 
  3. To elect Directors and 
  4. To elect members of the Statutory Audit Committee.  

In order to ensure that all relevant stakeholders can be a part of the AGM, the company will also be streaming the AGM live. It noted that “This will enable shareholders and other stakeholders who will not be attending physically to follow the proceedings.” 

GTBank 728 x 90

The link for the live streaming of the Meeting will be made available on the Company’s website at www.axamansard.com. 

READ MORE: Sterling Bank’s earnings to remain pressured but valuations still attractive

Recall that a few months ago, in March, the company’s Board of Directors announced the appointment of John Dickson as the company’s new Non-Executive Director. A month earlier, it also disclosed its plan to sell its pension management subsidiary (AXA Mansard Pensions Ltd) and some undisclosed real estate investments. 

Deal book 300 x 250
onebank728 x 90

Its unaudited financials for the period Q1 2020 reveal a growth across revenue and profit lines. Gross written premium grew by 21% from N17.4 billion earned in Q1 2019 to N21 billion in Q1 2020. Profit for the year for the group grew by a commendable 120% from N890 million in Q1 2019 to N1.9 billion in Q1 2020. 

As at Tuesday, the 7th of July when markets closed, the share price of the company was N1.59. The company’s EPS stood at 0.33 while its price to book ratio stood at 0.6082. 

 

app

Patricia
Continue Reading
Advertisement
Wealth.ng
Advertisement
Advertisement
Patricia
Advertisement
Advertisement
devland
Advertisement
devland
Advertisement
devland
Advertisement
Advertisement
financial calculator
Advertisement
devland
Advertisement
app
Advertisement