By Kayode Tokede and Olabode Jegede
A total of N45.1 billion funds belonging to commercial banks are trapped in four moribund companies listed on the Nigerian Stock Exchange (NSE), investigation by Nigerian NewsDirect has revealed.
Specifically, Japaul Oil & Maritime Services Plc, Ekocorp Plc, SCOA Nigeria Plc and Meyer Plc owed banks N39 billion in prior year.
These four companies in 2017 reported significant loss after tax in a turn of about N16.3 billion as against loss after tax of N23.78 billion reported in 2016 with Japaul Oil & Maritime Services contributing nearly 80 per cent of the loss.
The possibility of banks recovering these loans is unlikely except they take full provision for the loans.
According to investigation by Nigerian NewsDirect, some of these companies have defaulted in repayment of their loans. This implies that such loans might be called in at the discretion of Assets Management Corporation of Nigeria (AMCON).
Japaul Oil & Maritime Services chaired by Mr. Paul Jegede short-term bail out is unlikely as $350 million equity injection deal with Milost Global Incorporated was cancelled.
The Oil & Maritime Services Company had announced its intention to pull out of the much-publicized $350 million equity injection deal with Milost Global Incorporated.
Milost Global, a private equity company based in the United States, had earlier this year announced its intention to inject the above amount into the Nigerian firm.
Japaul, a company operating losses since 2014 reported a loss after tax of N13.2 billion in 2017 audited results as against N22 billion reported in 2016.
Diamond Bank is one of the banks on the hook of Japaul Oil & maritime for a combined N37.4 billion in external loans to the company in 2017 as against N31 billion in 2016.
Explaining on Diamond Bank’s N26.9 billion term loan, the company in its 2017 financial statement said, “Facility represents $70,000,000 term loan secured from Diamond Bank Plc on 20 November 2013 for a period of 5 years with 90 days moratorium on principal plus interest, to finance acquisition of 3 vessels and 2 tug boats under vessel lease agreement with Marine Delivery Pte Limited, Singapore the transaction was facilitated by Nationwide Equipment Company of Jacksonville, Florida U.S.A.; and to pay down on Guaranty Trust Bank’s existing vessel finance facility of US $25million.
“The interest on the facility is offsore interest plus 3% per annum. The facility was secured by legal or commercial mortgage on the 5 vessels/boats being financed, legal mortgage on Japaul’s jetty, land and buildings.
“However, a balance of US$66,478,405.35 was restructured in line with the Company’s new cashflow 10-year tenor representing the outstanding 2.5 years of previous 5-year tenor plus 7.5 years at interest rate of 10% per annum.
“On 24 April 2014, Japaul Oil obtained additional $9,000,000 term loan from Diamond Bank Plc for a period of 10years with 90 days moratorium to finance acquisition of a vessel and exercise right of first refusal under lease agreement with Marine Delivery Pte Limited Singapore.
“The facility was legal or commercial mortgage on the 5 vessels being financed, legal mortgage on Japaul’s jetty and Japaul property, the company had explained its 2017 audited results.
In addition, the company said, Facility represents $20,000,000 term loan secured from Access Bank Plc on 20 February2014 for a period of 5years with 12months moratorium, to finance acquisition of 2 dredges.
“The interest on the facility is 9% per annum. The facility was secured by legal mortgage on the 2dredges being financed, and legal mortgage on Japaul’s jetty, land and building.
“Furthermore, it was restructured into a new term loan of USD$20million of 7-year tenor with 6months moratorium at 10.5% interest rate, the report had explained on Access Bank’s N10.5 billion term loans to Japaul.
The auditors of Japaul, PKF Accountants & business advisers in its report said, “We draw to Note 2.3 in the financial statements, which indicates that the Group incurred a net loss of N13.13 billion during the year ended 31 December 2017 and as at that date, the Group’s current liabilities exceeded its current assets by N8.14 billion (December 2016 :N7.455 billion).
“The group’s continued existence is dependent on revenue from contracts with major international oil companies (IOC) and lending from creditors. The group’s shareholders’ funds have been eroded to the tune of N27.62 billion as at December 31, 2017.
“This was as a result of persistent operating losses in the last four years. Total indebtedness stood at N45.46 billion as at December 31, 018 and a gearing ratio of 185:1,
“The company is exposed to liquidity and foreign currency risk arising from the group’s borrowings denominated in foreign currency (US dollars). This risk is intensified in terms of unprecedented depreciation of the naira against the dollar, considering shortfall in the supply of dollars, where customers are unable to make payments. This will impact on the group’s ability to meet up with the repayment of its obligations denominated foreign currency.”
Another moribund with trapped loan is SCOA Nigeria. The company in 2017 had reported N1.9 billion loss after tax from N1.6 billion reported in 2016 over dwindling revenue
The company’s non-current borrowings dropped to N1.8 billion in 2017 from N2.5 billion in 2016 while current borrowing moved to N5.1 billion in 2017 from N4.08 billion in 2016.
For commercial banks borrowing, SCOA Nigeria had borrowed N15.8 million from All States Trust Bank now Ecobank Nigeria Plc and N158.9 million from Access Bank Plc in 2017.
A total of N163.4 million was borrowed from Heritage Bank advance-short term 2-5 in 2017.
In addition to SCOA borrowing, Union Bank had lent the company N246 million in 2017 from N186million in 2016 while Enterprise Bank loan dropped to N550 million from N563.9 million in 2016 as import facilities.
The other two companies, Ekocorp and Meyer reported loss after tax of N1.2 billion and N267 million in 2017 respectively.
For Ekocorp, it borrowed N39.7million from banks in 2017 as against N14.29 million in 2016.
According to the Ekocorp statement, “In 2016, the company obtained finance lease facility for the sum of N4.3million from Fidelity Bank Plc to enable Ekocorp Plc purchase medical equipment. “The facility is for tenure of 21months at the interest rate of 20% per annum and is secured with charge over the assets financed by Fidelity Bank Plc and legal mortgage on property at Surulere.
“In2017, the company renewed its overdraft facility from Fidelity Bank Plc to enable Ekocorp Plc meet operational needs. The facility is for a tenure of 365days at the interest rate of 25% per annum. The facility is secured with legal mortgage on property at Surulere,” the company explained.
In addition, Meyer’s N25.4 million loans from First Bank of Nigeria (CBN)/Bank of Industry (BoI) and N562 million loans from Union Bank of Nigeria were transferred to AMCON.
“During the year, the company defaulted in repayment of the loan. The implication of this is that the loan may be called in at the discretion of AMCON. Hence, the outstanding balance at year end has been reclassified to current liabilities, the company stated in its 2017 results to the Exchange.