Tag: AMCON

The Asset Management Corporation of Nigeria (AMCON) means different  things to business owners. To banks, where the corporation bought over 13, 000 bad loans worth of N5.6 trillion, it is a restorer of hope. But, to recalcitrant debtors, whose bad loans were purchased, AMCON is a nightmare and a killer-pill. However, the corporation insists its mission is not to kill but to revive businesses  and make them irresistible to new investors, writes COLLINS NWEZE.

So, selling is difficult because the economy is challenged. The time of recession is not the right time to sell because when you sell, you may not get the value of your assets,” he disclosed.
The AMCON said it has plans to sell its majority stake in Peugeot Automobile Nigeria (PAN) Limited, a local joint venture with the major French automaker. Bids are being invited from investors.
Peugeot Citroen is the technical partner to the Nigerian assembly plant, which has capacity to assemble 240 cars a day, PAN said on its website.
The AMCON said it owned 79.3 per cent of PAN Nigeria Limited, having acquired the stake five years ago after purchasing the company’s debt and taking some as equity. PAN Nigeria Limited was set up in 1972 as a joint venture between the Federal Government and France’s Peugeot, with an annual production of 90,000 cars by the 1980s.
But operations nosedived and the company accumulated bad loans shortly after the government sold its stake via a privatisation to core indgenous investors in 2006.
On Multi-Trex, Nwauzor said: “If you go to Multi-Trex today, you will weep because of the bad management of the company. The place was mismanged. A Nigerian takes a loan and the first thing he does is to buy big cars. The cash for the cars is supposed to come from your profit and not taken out from the borrowed funds. Also, in the banking industry, insider loan dealing is a big problem because branch managers sometimes get five per cent of the loans. A lot of the loans went bad from day one because of insider dealings”.
According to him, the corporation took over some of the companies as dead entities, hence the need to shop for strategic investors with long-term interest.
He said: “AMCON did not go to Multi-Trex and say they wanted to take over. It was the loan the company borroed from a bank that AMCON bought. Now, we are trying to get the right investors and right management to run the place. No matter how much investment you make, if you do not have the right people to run the businesses, you will end up not making progress.”
Nwauzor confirmed Tinapa Resort as the investment of Cross River State under the administration of former Governor Donald Duke, noting that Governor Ben Ayade has shown interest to ensure that the business run successfully.
His words: “The idea was to recreate a mini Dubai in that place. We also want to see how we can attract the right investors. Some of the assets there are at the level of investment that you keep maintaining so that when an investor comes, he will not meet rotten assets. That is why Nigerians should appreciate what AMCON is doing.
“We appoint receiver-managers to oversee any asset that we take over. We make sure it is working. There are machines you need to grease everyday. So, the assets you want to sell must be in good order. We must provide police security, and keep the companies working. If you notice, at the middle of last year, we appointed Asset Management Partners to go after loans of N100 million and below. They are working tremendously. We then face the big ticket assets to tidy up before our time is up.”
The oil and gas industry, he said, is facing huge challenges. “The two oil rigs with us are not producing but we have to maintain them. But the cost of maintaining the rigs is heavy and if you do not maintain the rigs, they will go bad. The money are with Nigerians still doing businesses in other names but have refused to pay,” he said.
He said that last year, the Federal Government set up inter-agency committee on AMCON to help debt recovery. The idea was to round the debtors up and ensure they do not escape. The idea is to zero in on recalcitrant debtors.
“For SilverBird Group, the receiver manager is there and managing the place. AMCON does not want to kill any business. If you take over SilverBird Group and shut it down, the unemployment level will rise. If we revive the companies, millions of jobs will be created. You cannot sell Aero Contractors and make that money, but if you run it for five years or more, you will make your money,” he stated.
The Chairman of Senate Committee on Banking, Insurance and other Financial Institutions, Senator Rafiu Ibrahim, said that plans are underway in the Senate to strengthen AMCON’s debt recovery capacity.
Speaking on the theme: “Economic Rebuilding through Eligible Assets Recovery”, the committee cahir that time would soon run out on bad debtors to AMCON.
Ibrahim praised the new debt recovery drive by the corporation, adding that the legislators remain committed to help in the stabilisation of the economy.
He, however, noted that his committee must collaborated with key government agencies like AMCON, which carries a huge burden on behalf of the Federal Government to achieve the set objective.
Ibrahim said the Senate will no longer fold its arm and watch the economy destroyed by a few individuals indebted to the corporation to the tune of billions of naira.
“We can all attest to the renewed drive towards a more focused and enhanced assets recovery and the management approach under the new dispensation as evidenced by AMCON’s strides in recovering eligible assets from debtors. This underscores the corporation’s importance in the nation’s economic rebuilding effort. AMCON, since its establishment, has been a key stabilising and revitalising force in the Nigerian financial system and requires vital support from the legislature to achieve its statutory objectives,” he said.

AMCON’s leadership

After Kuru’s appointment as AMCON chief on August, 2015, succeeding Mustapha Chike-Obi as its pioneer Chief Executive Officer (CEO), he promised transparency in the sale of acquired assets and insisted on organising conducting open and competitive bidding processes.
“If you recall, what used to happen in AMCON was private disposal of assets. We have changed the whole policy. There is no longer private disposal of assets in AMCON. So, there will be no hanky-panky or secret deals in the disposal of our assets,” he promised.
Currently, a lot of specialised assets are waiting to be disposed, but disposing them at the prices they were bought is already a big challenge for the corporation. But many times, the assets could be re-valued based on discretion.
With the price of crude oil falling below $60 per barrel, AMCON’s ability to meet its debt obligations has also worsened. The drop in oil prices has reduced government’s ability to honour even its own commitment to some of the AMCON’s papers or bond holders. Secondly, because of the low prices of crude oil has affected turnaround in the economy, the economic activity of some of the businesses indebted to AMCON has been been weakened and its ability to repay challenged.
Besides, the impairment of assets is also affecting the prices of the assets that the corporation is holding. If we have an oil tank farm that was worth $50.1 billion a year ago, and one wants to buy it today, obviously it reflects the price of crude today.
Before AMCON was created, NPLs (Non-Performing Loans) rates were over 35 per cent, but today, they have fallen below 13 per cent after the corporation bought over 13,000 bad debts from banks. The poor NPLs rates were caused by insider-loan abuses and poor structured loans, among other factors.
The corporation has not only stopped further purchase of bad loans. It is trying to change its strategy from proving financial stability to recovering bad loans and consolidating its financial obligations.
Kuru believes that AMCON’s primary responsibility is not to take over businesses of debtors, but to support them.
He said: “If you see AMCON taking over any business, that means there is a problem with that business. Quite a lot of companies are operating but operating at a loss and you cannot continue to operate at a loss when you have obligations and cannot meet the such obligations then we will be forced to act.”
Kuru has urged strategic investors with long term interest in the economy that the right time to invest in the country is now, despite the slight challenges.
Kuru said: “AMCON is inundated with proposals from different investors with differs interests in the economy. Nigeria remains a growing and promising economy as far as investment opportunities are concerned but, it has to be for businesses and business owners that have long-term interest in Nigeria.
“Any investor without these characteristics may be overwhelmed as a result of the present situation of the economy, which is temporary to say the least. So, as far as I am concerned, the present economic challenge is actually the right time to invest in Nigeria; a time to lay a solid foundation and then grow with the economy in no distant time.”
According to him, AMCON will continue to sustain its tempo of recoveries, which began last year by strategically focusing on value enhanced exits of its portfolios, which encompasses continued negotiations and resolution of loans through cash recoveries, asset forfeitures through negotiation or enforcement; capital restructuring for short to mid-term exits as well as joint venture arrangements for asset operations and land development.
He assured that AMCON will also explore the creation of a robust Real Estate Investment Trust Scheme (REITS) to provide a market-driven exit for AMCON’s real estate assets as well as additional capital market instruments for institutional investors such as the Pension Fund Administrators (PFAs) and other interested parties. With these opportunities, Kuru said AMCON has a bouquet of attractive assets for different investors – locally and internationally.
Speaking at a three-day retreat organised by the Senate Committee on Banking, Insurance and other Financial Institutions in Uyo, Akwa Ibom State, Kuru said the corporation needs the support and partnership of the Senate given the high level of frustration it was getting from the debtors.
He said: “After more than six years of operation, all efforts to recover the loans diligently have failed. We now have to resort to the Act setting up AMCON by resorting to the courts. Let me be quick to add here that AMCON is not trying to unduly prejudice the views or positions of stakeholders, especially the judiciary,” he stated.
“AMCON remains a law abiding organisation with respect for the rule of law. However, our campaign is intended to draw attention to the enormity of the challenges and potential threats, which the bad loans in our portfolio pose to the wider economy and the common man. We are mindful of time as AMCON has a very short lifespan. Our sunset date of 2023 is drawing nearer each day. In fact, other similar institutions around the world, like Malaysia have wound up their recovery vehicles. They are now focused on managing or turning around the assets taken over during the recovery phase”.
By 2023, AMCON will cease to exist in line with the 10-year mandate given to it by the Act establishing it. However, the challenge is who will inherit the corporation’s unresolved assets if the corporation failed to achieve its mandate of resuscitating ailing businesses? These and many more are puzzles that only time will solve.

The Asset Management Corporation of Nigeria (AMCON) means different  things to business owners. To banks, where the corporation bought over 13, 000 bad loans worth of N5.6 trillion, it is a restorer of hope. But, to recalcitrant debtors, whose bad loans were purchased, AMCON is a nightmare and a killer-pill. However, the corporation insists its mission is not to kill but to revive businesses  and make them irresistible to new investors, writes COLLINS NWEZE.

With 13,000 businesses under its watch, the Asset Management Corporation of Nigeria (AMCON) should trail the Nigerian National Petroleum Corporation (NNPC) as one of the richest parastatals in the country.
Ironically, as the NNPC swims in wealth, the AMCON, with over 13,000 accounts valued at N5.6 trillion consist mainly of moribund companies. The companies, waiting for elusive investors, have little or no prospect of survival.
Some 400 obligors account for more than N4.5 trillion of AMCON’s N5.6 trillion loan profile (about 80 per cent of the corporation’s debt portfolio). Since its establishment in July 2010 to stablise the financial system by efficiently resolving the Non-Performing Loans (NPLs) assets of banks, AMCON has been on the hot seat. The companies under its watch accuse it of forcing killer-pills down their throats, or planning their total liquidation. AMCON’s Chief Executive Officer, Ahmed kuru, however dismissed the allegation as unfounded.
The AMCON chief describes the corporation as one of the best things to happen to economy. To him, AMCON has not only stabilised the financial sector through its debt purchase scheme, it has offered fresh funds to rescuciate many of the ailing lenders.
The takeover of the three bridged banks – Mainstreet, Enterprise and Keystone prevented the depositors from losing their savings. The corporation’s intervention saved thousands of jobs that would have been lost to the closure of the institutions. The AMCON has sold two of the banks to new managers and Keystone’s sale plan is ongoing. Kuru believes that the recovery of bad debts and revival of huge businesses under AMCON’s control will boost the local economy and create millions of jobs.
Besides, a debtors’ list obtained from AMCON showed the top debtors as at December 2016, led by Rockson Engineering Company Limited with its N105 billion debt portfolio; Capital Oil-Gas Industries Limited (N102.4 billion); MRS Holdings Limited (N83.8 billion); Dansa Oil & Gas/Bulk Pack (N41 billion); Bi-Courtney Limited, (N35.5 billion); Home Trust Savings & Loans Limited (N27.2 billion) and National Clearing & Forwarding Agency (N20 billion).
Others are: Roygate Properties (N24.6 billion); Suru Worldwide Ventures Limited (N25.8 billion); Tanzila Petroleum (N52 billion); Multi-Trex Investment Limited, (N3.8 billion) and Resort International Limited (N38.4 billion) among others.
But many of the debtors have taken the corporation to court. Some are either contesting the figures or denying owing the corporation a penny.
In an October 6, last year judgment delivered by the Federal High Court, Abuja between Capital Oil and Gas Industries Limited (plaintiff) and AMCON (defendant), the judge ordered the defendant to restructure the plaintiff’s debt.
The court further orderd the defendant to provide N16 billion trade finance facility to revamp the business and pay plaintiff’s trade creditors. It further directed the defendant to pay additional N10.59 billion to the plaintiff for the payment of sundry creditors, who continue to threaten the plaintiff’s business.
The management of MRS Holdings Limited also denied claims that it was owing AMCON. The management also refuted the claim on any ongoing plans to liquidate its operations.
In a statement, the MRS management said: “Our attention has been drawn to a recent publication by the by the Asset Management Corporation of Nigeria alleging that MRS Holdings Limited is indebted to it in the sum of N81 billion and that the Corporation has instituted Suit No: FHC/L/CP/923/2016 to wind up the company over the inability of MRS to pay the alleged debt”.
Describing AMCON’s claims as false, the firm said: “MRS challenges in the strongest possible terms, the false claim by AMCON that MRS is indebted to AMCON in the sum of N81 billion or any sum at all. The correct position is that MRS obtained a loan from a consortium of banks in Nigeria for a viable project.”
“AMCON has declared a new aggressive debt recovery drive. MRS has no problem with that but this does not give AMCON a licence to embarrass and harass companies. It is not a crime to obtain loans for viable projects. Execution of viable projects leads to job creation and growth of the economy. However, when companies that obtain loans for legitimate businesses are being harassed and embarrassed in the name of aggressive debt recovery, it signals danger for the growth of the economy”.
According to the downstream oil firm, it had taken notice of AMCON’s frivolous recovery cases against many companies, which were dismissed by the courts.
It said: “MRS is taking legal advice to clear its good name and bring necessary actions to seek damages for the embarrassment and damage caused the company’s reputation and goodwill by AMCON’s publication and action.
“MRS further assures the general public that MRS Holdings Limited and its subsidiaries will continue to transact their businesses with the highest ethical standards and in accordance with the extant laws of the country,” it said.
Efforts to contact MRS over the weekend, on its current debt status were unsuccessful as calls to the company’s official line were not answered.
The Federal High Court, Lagos had earlier ordered Bi-Courtney Group of Companies and its owner, Dr. Wale Babalakin to hand-over its concessionary powers to AMCON with immediate effect. This follows the firm’s inability to pay a debt owed the asset managers. Besides, the court ordered Bi-Courtney’s account in banks to be frozen with immediate effect just as it ordered the banks to disclose all account balances to the asset managers.
AMCON was also ordered to take over three other giant companies – Chartered Investment Limited, Resort International Limited and Roygate properties.
The order, according to the court, took immediately effect in accordance with a concessionary agreement with the Federal Government. It also ordered AMCON to take over the Old Federal Secretariat building in Ikoyi, Lagos, belonging to Roygate Properties pursuant to a concessionary agreement between Roygate and the Federal Government.
On these developments, Kuru noted that AMCON has never and will not run any business. But as facilitators, it encourages competent professionals to manage any of the businesses taken over by it. “We want debtors to come and talk to us on how they want to pay. We do not gain anything by embarrassing anybody”, Kuru said.
On the continued posting of losses by the corporation, he said: “AMCON cannot make profits. It is not possible for AMCON to declare profits. We received about N160 billion annually from the Sinking Funds. The main objective of AMCON is to ensure it discharges its obligations at the end of its term”.
The AMCON chief said it has so far recovered N644 billion in cash and assets from debtors, adding that it will continue to engage debtors to pay up their debts. It said 80 per cent of the bad loans it acquired from banks were beyond redemption. “Financial institutions have primary responsibilities to give out loans and more than 65 per cent of banks’ incomes are from interest and loans. All these facilities they have transferred to AMCON, 80 per cent of them are already inside the coffin. The only things that supports them, are the supporting assets,” it said.
In an interview, AMCON’s Head, Corporate Communications, Jude Nwauzor, said that the AMCON has no interest in killing any business but to see it thriving. He listed Peugeot in Kaduna, Multi-Trex in Ogun State, the two oil rigs, tank farms, Tinapa Resort, are heavy investments in the books of AMCON.
AMCON, he said, also has several real estate businesses and confirmed that the Federal Secretariat in Ikoyi was in its book.
“These are massive investments. Look at Peugeot, when it was at its peak, it was assembling 90,000 vehicles monthly. A factory that does 90,000 vehicles cannot employ anything less than 5,000 workers. You can imagine the number of workforce and ripple effect of their earnings. AMCON stepped into a place like Peugeot to stop it from collapsing,” he said.
According to him, with the investments the corporation is making and ample opportunities that this present administration and AMCON are exploring, one can imagine what can happen if Peugeot comes back in full stream.
He said: “Right now, things are not what it should be. They have orders to supply cars but where are the funds. Although with the right investment, AMCON has stepped in to ensure the place is not run down. We want new investors to take over the business and it will start flying again. That is the type of impact that AMCON wants to see.
“Imagine if Multi-Trex which is a cocoa processing company in Ogun State, is functioning, which when it was in full stream, had b etween 4,000 to 5,000 workers. Imagine if Tinapa Resort is functioning, the number of Nigerians that will be employed. You can imagine if Aero Contractors is in full flight and the number of workers that will be employed and what they will do to the economy. Imagine if Arik goes down and AMCON did not intervene,” he queried.
He said the corporation had intervened in Arik, adding that the impact of Arik in the aviation industry cannot be over-emphasised.
His words: “You can imagine if Afrijet is flying. That is why the AMCON chief always insists that Nigerians need to rally round AMCON for it to succeed because a lot of Nigerians do not understand that it is the taxpayers money that the people have borrowed and refused to pay back. It is you and I that keep our money in the banks and these borrowers go for the money and refuse to pay back,” he continued.
He said that bad loans in the industry have made it difficult for more Nigerians to borrow. “People have borrowed money to set up poultries and those funds have ended up in property market in Dubai. A debtor is flying private jets, buying houses in Beverly Hills, and Union Bank where he took the money is suffering. We actually intervened in 22 banks in Nigeria, but the ones that were irredeemable were the ones that were bridged. There were other ones that AMCON bought over the bad loans and gave them fresh funds to do new businesses.
“The AMCON had to bridge the banks, stabilise them for sale. The Federal Government had the option of liquidating those banks, but the depositors would lose their funds. But you can imagine what would have happened to the economy if AMCON was not created. Zimbabwe would have been like a paradise compared to Nigeria,” he said.
Speaking on Peugeot takeover, he recalled that the company was doing 90,000 vehicles in the 80s but now, it is struggling to do 6,000 because of lack of proper investments. “Everything AMCON owns is for sale. At the right price, it is sold. But the state of the economy is making it difficult for us to sell. I don’t know how many Nigerians can raise the fund to buy Aero Contractors.