The Chairman of the Abuja Electricity Distribution Company (AEDC), on Monday, disputed recent reports that a firm, KANN Utility Company Limited, a core investor, is planning to sell its 60 per cent equity stake in the firm over alleged squabbles as it battles a debt crisis.
Shehu Malami also described as untrue reports that CEC Africa (CECA) of Zambia, paid $81 million cash (as equity) as well as raised another $123 million loan security to acquire AEDC.
In an earlier report, the Managing Director/CEO, CEC Africa Investment Limited, Emmanuel Katepa, had said apart from paying $81 million cash, “CECA also raised additional $123 million loan security to acquire AEDC”.
Mr Malami explained that several issues concerning the ownership of shares in AEDC were simply misrepresented by its sponsors.
He said rather it “was his goodwill that actually paved the way for CECA and and another firm, Xerxes, through KANN as a special vehicle, to not only have access, but win the bid for the distribution company in 2013.”
Mr Malami said it was because CECA claimed to owns 75 per cent equity in AEDC that made it possible for the United Bank for Africa (UBA) to approve the loan facility needed to pay for the company.
“The truth is that CECA owns only 30 per cent in AEDC, but misled its parent company in Zambia that it owns majority shares with the sole intent of sourcing for capital from Zambia Stock Exchange.
“This is a clear indication of how desperate they are for CECA to short-change other shareholders in AEDC,” he said.
He also accused CECA of misrepresenting the facts that it injected funds into KANN as investment in AEDC “whereas the fund was a loan to be repaid by the company”.
“So, technically, there is no evidence to date of equity investment made by CECA either at the Central Bank of Nigeria (CBN), UBA or any other regulatory agency to establish that.”
He dismissed the so-called crisis among AEDC partners as a “premeditated agenda fueled essentially by greed with a view to forcefully taking over majority shares in the company, which has been resisted vehemently by the Nigerian shareholders”.
Mr Malami recalled that in 2012 he had started the process of acquiring shares in AEDC with the formation of Xerxes Limited in partnership with some Nigerians investors “like Felix Oheiweri, Maiyaki and Jones”.
In 2013, he said he joined other Nigerians to form KANN (Kogi, Abuja, Niger and Nasarawa), while inviting Copper Belt of Zambia to buy 50 per cent of the shares they bided for in AEDC.
He said in KANN, Nigerians and Zambians own 50 per cent shares each through Xerxes Nigeria Limited and CECA respectively, while the federal government owns 40 per cent and KANN 60 per cent of AEDC.
Despite the intervention of the office of Attorney General of the Federation and Minister of Justice who appointed the Bureau for Public Enterprises to reconcile the aggrieved parties, Mr Malami said CECA opted to petition the Bureau for Public Enterprise (BPE).
Notwithstanding its being a co-borrower of the facility from UBA, Mr Malami said Xerxes Global Limited was never allowed access to KANN accounts and has been kept in the dark on the dealings over KANN accounts.
Meanwhile, Mr Katepa had said KANN’s shareholders, CECA and Xerxes, had agreed to jointly bid for the purchase of 60 per cent equity stake in AEDC between 2012 and 2013.
He said both firms executed a joint development agreement on July 31, 2012 to incorporate and become shareholders of KANN in the acquisition of the 60 per cent shareholding of AEDC.
Following a meeting between the Chairmen of CECA and Xerxes, Mr Katepa said it was agreed that both parties will hold 50 per cent each of the shares of KANN.
With $164 million as the purchasing price of AEDC, Mr Katepa said both parties agreed to provide 25 per cent of the funding (about $41 million) by cash contributions in line with their 50:50 equity interest.
In addition, it was also agreed that KANN would borrow the remaining 75 per cent of the acquisition costs (about $123 million) from a third party lender.
He said when BPE demanded the initial upfront payment for the 25 per cent ($41 million) payment, CECA was left to handle the entire payment after Xerxes could not raise its equity contribution.
“CECA paid for that portion of the acquisition amount in full being $41 million in March 2013. Xerxes did not fund any of this equity payment.
“By August 2013, the 75 per cent balance payment of $123 million (to be funded through a loan from UBA) was due, but Xerxes could still not guarantee the equity loan repayment at the UBA.
“Because of this, CECA provided a mandatory Debt Service Reserve Account of $40 million as a security cover for the UBA loan.
“At this point, CECA had funded $41 million paid directly to the BPE and an additional $40 million for the UBA Debt Service Reserve Account,” Mr Katepa said.
AEDC is one of the 11 electricity distribution companies licensed by the federal government in 2013.
But, the company is currently facing threats of revocation of licence by the Nigerian Electricity Regulatory Commission (NERC) allegedly for not meeting the minimum requirement for bulk energy payment to the Nigerian Bulk Electricity Trading Plc (NBET) in July 2019.
In a recent published public notice, the commission listed the company among the DisCos expected to defend their operations latest by December 7 this year or risk having their licences revoked.
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