LAGOS: The
founder of Nigeria's largest airline Arik Air, placed in receivership earlier
this week, accused the government of seizing Arik to meet a political goal of
creating a "national carrier" and said he would challenge the move in
court.
State-owned "bad bank" AMCON said on Thursday the
move arose from Arik's inability to pay workers and creditors. Arik is West
Africa's biggest airline by passenger numbers but has been hard hit by
Nigeria's currency crisis as its customers are invoiced in naira but fuel
suppliers are paid in dollars.
Arik founder Michael Arumemi-Ikhide said he believed the
government staged the move after a team travelled overseas in search of
partners but were turned down and advised to work with the decade-old Arik.
"This (takeover) was designed by the government. Ever
since this government came into power there has been the ambition to have a
national carrier," Arumeni-Ikhide told Reuters. "We are going to
challenge the forceful takeover in court. By earlier next week we will be
filing the case."
Analysts say the dispute showcases the complexity of doing
business in Nigeria, with some suggesting it could damage Nigeria's efforts to
shake off its image as a risky frontier market for international investors.
Arumemi-Ikhide said AMCON had used armed police to take
control of the airline on Thursday, but that shareholders have retained their
shares. AMCON said it had a court order to take over Arik and had to use
policemen and bailiffs to carry it out.
Arumeni-Ikhide said the action recalled 2010 when British
billionaire Richard Branson pulled out of Virgin Nigeria, a 10-year partnership
with the Nigerian government he helped set up, citing alleged interference by
politicians and regulators.
AMCON said on Thursday a receivership manager had been put
in charge of Arik as the airline had been fallen into a "precarious
situation largely attributable to its heavy financial debt burden (and) bad
corporate governance".
Arumemi-Ikhide denied this. He said Arik's debt had been
secured as a Union Bank guarantee to buy new planes through European export
banks. But he said the dollar guarantee was turned into a more expensive naira
loan without recourse for Arik when Union Bank was rescued by AMCON in 2010 to
help stem a financial crisis.
That brought Arik's total indebtedness to 147 billion naira
($484 million). But Arumemi-Ikhide said Arik had grown rapidly and had been
planning to raise equity capital of as much as $1 billion in the second quarter
and then a possible stock market listing in Lagos and London, rather than
sourcing debt.
He said Arik had an enterprise value of around $4 billion.
In 2015, the Nigerian government set up a committee on
establishing a national airline, in fulfilment of campaign promises which
brought President Muhammadu Buhari's All Progressive Congress (APC) to power.
An APC transition paper seen by Reuters had proposed merging
a dozen debt-laden airlines on AMCON's books into a single carrier. It would
include Arik and operate in partnership with a global airline to serve the West
and Central African region.
