A Federal High Court sitting in Lagos on Friday nullified the legitimacy of 9mobile’s Interim Board because minority shareholders were not carried along in the process of constituting the board.
This has thrown a spanner in the wheel for the proposed sale of the fourth largest telecommunication company in Nigeria, as the Federal High Court has declared that any buyer of the company does so at its own risk.
Justice Ibrahim Buba of the Federal High Court Ikoyi Lagos, on Friday 12, January 2018 issued a buyers beware (caveat emptor) to bidders interested in the sale of 9mobile, after receiving evidence from Spectrum Wireless, showing that non-bank investors in Emerging Markets Telecommunications (EMTS) also known as Etisalat, which is now 9mobile were not recognised or involved in the setting up of the board by the Central Bank of Nigeria (CBN) and the consortium of 13 Nigerian banks.
According to Spectrum Wireless, Etisalat secured a N105.6 billion and $235 million loan from Nigerian banks in 2011, under the auspices of United Capital Trustees and after defaulting on its loan payment, resulting in a takeover of the company, United Capital Trustees initiated action and received approval of the court, through an experte motion dated July 3, 2017 to appoint a transitional board, comprising among others; Joseph Nnanna, who is currently the deputy Governor of the CBN as Chairman of the board, Boye Olusanya as Managing Director of 9mobile and Funke Ighodaro as Chief Financial Officer, who have since rebranded the company and taken further action on its sale, announcing a bidding process to interested investors without involving or considering Etisalat’s non- bank investors.
“Concerned that United Capital Trustees did not take into consideration, my client’s 17.5 percent stake in EMTS, Spectrum Wireless approached the court in December 2017 to challenge the experte order that was granted to United Capital on July 3, 2017 and this cumulated in the court ruling of January 12, 2018 which has nullified the Interim Board set up for 9mobile,” Reuben Atabo, of R.O Atabo & Co, Yakubu Gowon Way Kaduna, Solicitors for Spectrum Wireless told the Press on Sunday January 14, 2018.
Atabo said Spectrum Wireless and three other non-bank investors have invested about $100 million in EMTS since 2009 without any returns.
Contrary to the suggestions that the former Etisalat board members have packed up and resigned, Spectrum Wireless was able to prove to the court that there are 20 of them and only seven of the members resigned, with 13 other directors of the board, still intact.
“We started making enquiries on the return of our investment since 2010 and we wrote series of letters to First Nominees, a subsidiary of First Bank because First bank is the custodian of our money. When we put in money, there was a custodian agreement between Spectrum Wireless and Etisalat to ensure that our money is secure. We have also written a number of times to the Nigerian Communication Commission (NCC) who kept telling us that they are investigating.
My client did not even know when the $1.2bn loan was taken from the banks because it was done in secrecy and they never notified us. It is not only banks that gave loan to Etisalat,” Atabo said.
The December 31, 2017 deadline for the handover of 9mobile, was postponed to Tuesday January 16, 2018 after the two regulators approved the request for extension of time by the 9Mobile Interim Board.
Bharti Airtel, Smile Telecoms Holdings, Helios Investment Partners LLP, Teleology Holdings Limited and Globacom were in December 2017, shortlisted as the five bidders still in the running to take over ownership of 9mobile, after rescheduled bidding process took place with the approval of both regulators and lender banks involved.
Tony Ojobo, Director, Public Affairs, NCC had issued a statement last week saying that “a winner will be declared after Barclays Africa, the financial adviser for the lender banks had reviewed all bids submitted by January 16, 2018 and makes recommendations to the Interim Board.” However, with the nullification of the board, there will be no declaration of a winner or sale of 9mobile until the court issues are resolved.
On the telecoms industry’s position on this issue, Olusola Teniola, President, Association of Telecommunications Companies of Nigeria (ATCON) told BusinessDay that the situation that EMTS finds itself in should not deter investors in the sector.
“Spectrum Wireless has no point unless they want 9mobile to file bankruptcy, because Mubadala and Etisalat who are majority shareholders have relinquished their shares in order to make way for a someone who can successfully run the company. 9mobile has over four thousand workers with their jobs on the line, so can Spectrum Wireless run the company? This is a corporate and commercial decision. I understand and accept their position but they need to look at the wider picture. The only way any investor can get its money back is if the company is sold, so the point Spectrum Wireless is making about not being notified is immaterial when it comes to bankruptcy,” Teniola told BusinessDay in a telephone interview.
BusinessDay gathers that United Capital is appealing the latest court judgment.