The Asset Management Corporation of Nigeria (AMCON), the Federal Government’s special purpose vehicle for asset recovery, has revealed plans to disengage from the ownership and operations of embattled airline Arik Air.
This move, either through a mutually beneficial negotiation with Arik’s shareholders or the liquidation of assets, is expected to take place in the near future, according to AMCON.
Insiders at the nation’s ‘bad bank’ hinted that AMCON’s takeover of the “technically insolvent” airline in 2017 was driven more by political and economic considerations of the previous administration rather than the airline’s long-term viability.
As a result, AMCON is now determined to withdraw its support from the airline.
AMCON took control of Arik Air in February 2017, citing gross mismanagement by the airline’s owners and debts exceeding N300 billion ($732 million) as reasons for its intervention.
However, recent developments, including a Federal High Court ruling criticizing AMCON’s transparency and the transfer of Arik’s assets to establish a new airline, have added complexity to the situation. The court ruling also barred Arik Air Chairman Johnson Arumemi-Ikide and others from accessing Arik Air facilities.
The Receiver Manager of Arik Air, Kamilu Omokide, has confirmed that besides the liquidation option, AMCON has presented other possibilities for a peaceful resolution and the return of assets to the shareholders.
He emphasized that the airline has been facing financial distress since 2015, with consistent losses from 2014 until now, largely due to misguided strategies in international expansion and excessive borrowing.
Omokide reiterated that AMCON has made efforts on three occasions (in 2018, 2019, and 2022) to reach an amicable settlement of the debt and facilitate the return of the airline to its shareholders. In a 2018 memo, the shareholders expressed the presence of an investor willing to settle Arik’s outstanding debt.
AMCON agreed, subject to regulatory approvals, to settle the debt by paying N65 billion in full and final settlement of AMCON’s debt of N135.3 billion.
Despite the strained relationship that has resulted in litigation, Omokide assured that AMCON will not reject any proposed payment from the shareholders.
He emphasized that AMCON remains focused on its objective of recovering funds and, if presented with a favorable proposal, the corporation will consider it without personal bias.
AMCON’s potential withdrawal from Arik Air opens avenues for negotiations and alternative solutions, providing hope for a resolution that could benefit both the shareholders and the troubled airline.
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