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Mon 12 Jun 2017 02:46 PM

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Stricken Nigerian airline 'in talks with' Dubai-based conglomerate

Arik Air aims to offset debts to creditors but must wait for KPMG audit to conclude

Stricken Nigerian airline 'in talks with' Dubai-based conglomerate

Shareholders of Nigerian carrier Arik Air are in advanced talks to sell
the airline’s debts to a Middle East conglomerate, local media said on Monday.

Talks have been held with numerous investors but a commitment has been
reached with the conglomerate, which is headquartered in Dubai and plans to do
business in Africa. 

The company has reportedly
voted funds to invest in aviation, power and agriculture and expressed an
interest in Arik Air. The two firms started negotiations last week in London
and have reached some commitments, according
to Nigeria’s The Nation Online
.

Arik Air was taken over by
the Nigerian government in February after it emerged that the airline was
grappling with a huge debt portfolio. It is being managed by receivers
appointed by national debt recovery agency the Assets Management Corporation of
Nigeria (AMCON), which claims the airline owes it N263.7 billion ($833
million).

The Nation Online said Arik Air’s
chairman before receivership, Sir Joseph Arumemi-Ikhide, had confirmed the
discussions. It quoted an additional, unnamed source as saying: “We have been discussing with investors. We are having
serious discussion with this organisation, which is based in the Middle East,
because they have a package to invest in Africa and take advantage of the
region’s growing economy.

“They are interested in
expanding our operations and will give us additional airplanes to augment the
six we ordered from Boeing.”

Should a deal be finalised,
it is expected that the Middle East investor would offset Arik’s debts and
provide it with new operational funds.

However, a spokesperson for
Amcon told Arabian Business no asset sale could be arranged until professional
services firm KPMG has completed a full audit of Arik Air’s accounts. This was
scheduled to finish within 90 days from the February takeover, but is taking
longer than expected, the spokesperson said.

“KPMG has not concluded the
study of the financial state of Arik Air. We cannot be selling any asset before
this report is finished and when the books are not tidied up,” the spokesperson
said.

Nigeria’s aviation industry
has taken a hit in the past year, with the country’s second largest airline,
Aero Contractors, reported in March to have laid off two-thirds of its
workforce to save costs.

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