Two AEDC investors in equity, ownership tussle

 John Ofikhenua, Abuja

THE tussle over the ownership and equity holding  of Abuja Electricity Distribution Company (AEDC),  between CECA African Investments Limited and Xerxes Global Investments Limited, on Tuesday  came to the fore.

The Managing Director/CEO, CECA Africa Investment Limited, Emmanuel Katepa, in a statement, in Abuja on Tuesday, said  “CECA, not Xerxes paid $81million cash and raised $123million loan security to acquire AEDC.”

Katepa said, in a statement that KANN was floated by the two shareholders namely CEC Africa Investments Limited, which has over 60 years history of power operations across several southern African countries and Xerxes Global Investments Limited to jointly bid for the purchase of 60 per cent equity stake in AEDC between 2012 and 2013.

Katepa said both firms executed a Joint Development Agreement dated  July 31, 2012 to incorporate and become shareholders of KANN in the acquisition of the 60 per cent shareholding of AEDC.

The statement stated that the Chairman of CECA is Mr. Siyanga Malumo and the Chairman of Xerxes is Ambassador Shehu Malami.

CECA said it was agreed that both CECA and Xerxes would own and hold 50per cent each of the shares of KANN and that each of the two parties would make equal financial contribution towards the acquisition with regards to the purchase of 60per cent shares of AEDC.

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The statement added that the “purchase price of AEDC was $164 million and it was agreed by XerXes and CECA that this would be funded 25 per cent ($41 million) by cash contributions from Xerxes and CECA (in their 50/50 percentage shareholding interest) and KANN would borrow the remaining 75per cent of the acquisition costs ($123 million) from a third party lender (which ended up being the United Bank for Africa (UBA).

“When the initial 25per cent ($41 million) was demanded by the Bureau of Public Enterprises, Xerxes could not raise its equity contribution, leaving CECA to wholly fund the initial 25per cent equity payment. CECA paid for that portion of the acquisition in full, being $41 million in March 2013. XerXes did not fund any of this equity payment.

“By August 2013, the 75per 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.

“The $40 million was utilised for the payments to UBA and, accordingly, CECA funded $81 million. XerXes did not fund any part of these payments. To secure this repayment XerXes pledged 25per cent out of its 50per cent shareholding in KANN to CECA.

Speaking with The Nation on phone, Malami urged CECA to state the bank and when the payment was made.

He said: “If they said they paid the money, ask them where was the payment made? To which bank was the payment made?  In whose favour was the payment  made? And when was the payment made?”