Arik - TheNigerian

Arik Air shareholders tackle AMCON over N455bn debt claim

TheNigerian — Mon, 20 Jan 2025 07:20:50 +0000

The shareholders of Arik Air, an indigenous airline currently under the control of the Asset Management Corporation of Nigeria, have debunked claims that the debt accruable to the airline’s owner, Johnson Arumem-Ikhide, has risen to N455bn.

The shareholders, through a statement signed by their representative, Godwin Aideloje, described as fallacy the debt record of AMCON against Arik founder.

Earlier, AMCON, through its Head of Corporate Communication, Jude Nwauzor, said the total debt of Arumem-Ikhide was N455.17bn as of December 31, 2024, in all his three investments.

AMCON also said that its intervention in the troubled airline in February 2017 saved the carrier from liquidation, insisting that it would ensure the recovery of the total debts owed to the corporation by various business organisations in Arik Air.

Giving the breakdown of the total debt, Nwauzor alleged that Arik as of December 2024 owed AMCON N227.6bn; Rockson Engineering, N163.5bn, while Ojemai Farms owed the corporation another N14bn, totaling N455bn.

Reacting to this, Arik shareholders refused to comment on the matter saying it was currently before the court.

“This is a matter before the court. Unlike AMCON who have no respect for the courts, we will not resort to subjudical remarks. We will not join the desperate attempt by AMCON to overreach the courts and desecrate our justice system.

“The fictitious claim of N455bn as alleged Arik Air indebtedness to AMCON by Mr Jude Nwauzor is a fallacy. It seems clear that AMCON is invested in dubious storytelling and falsehoods.

This allegation is defeated by AMCON’s claim in its Suit No. FHC/L/CS/175/17 with which it took Arik Air into receivership and gained full control and management of operations, assets, and liabilities of the airline,” they stated in the statement.

The shareholders recalled a Federal High Court judgement of March 31, 2023, ordering AMCON and its Receiver Manager to file a statement of affairs and audited financial reports with the Corporate Affairs Commission to balance and compare the books, Aideloje said AMCON refused to appear before a Financial Reporting Council to defend it positions.

The shareholders said rather than appear before the reporting council, AMCON uploaded the audited account of the business(es) on the Arik Air website, a document the shareholders have also dismissed.

During the press briefing, the Head of Corporate Communication at AMCON said considering the state of Arik Air’s insolvency at the takeover time, the airline would have been sold in its entity if not for the intervention of the Federal Government which directed that the airline should be managed.

But in the shareholders’ reaction, Aideloje stressed that “It is instructive to note the new version of the reason why AMCON took over Arik is a government mandate. What a preposterous statement from a Federal Government employee! This is a gross misrepresentation of the Federal Government as being in the business of arbitrary takeover of private businesses with a stroke of pen. This is indeed a disservice to the government and people of Nigeria by AMCON.

“We wish to state again that before the forceful takeover, Arik Air was recognized for its operational excellence and significant contributions to Nigeria’s aviation sector. Contrary to AMCON’s claims, the airline was meeting its financial obligations, as evidenced by remarks and recognition by global institutions; recently Afreximbank acknowledged legacy Arik as a model in Africa at a just-concluded International Aircraft Leasing and Finance Conference in Ireland Dublin a few days ago.”

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AMCON Mulls Arik Air Liquidation Over N227.64bn Debt

TheNigerian — Sat, 18 Jan 2025 05:11:57 +0000

On Friday, the Asset Management Corporation of Nigeria (AMCON) said that it had not foreclosed on liquidating Arik Air due to the company’s N227.64 billion debt.

Under Sir Johnson Arumemi-Ikhide, the airline had non-performing loans totaling more than N227.64 billion with Union Bank of Nigeria (UBN) and Bank PHB (now Keystone Bank), which AMCON acquired from the two banks.

Jude Nwauzor, the chairman of AMCON’s Corporate Communications Department, told reporters on Friday that the possibility of liquidating Arik Air remains open despite the airline’s repeated unsuccessful attempts to be revived.

Additionally, Nwauzor pointed out that section 48 gives the corporation the authority to designate a Receiver or Receiver Manager to seize, oversee, and dispose of the assets of a debtor business such as Arik.
He noted that liquidating Arik Air is still an option that AMCON has on the table given the legal authority it has.

He claimed that prior to the company taking over, Arik was already insolvent and poorly managed, with no kobo from anyone.

However, Nwauzor also mentioned that the Corporation had paid off its technical partners, other aviation professionals worldwide, and trade creditors for Arik’s debt.

The corporation, which still has the ability to liquidate Arik, found it difficult to manage these debts. However, we are still in charge of Arik, which was already bankrupt and remains so as we speak,” Nwauzor stated.

According to him, Arik was balance-sheet insolvent as of December 31, 2016, with total liabilities of N289 billion and a negative equity value of almost N80 billion, according to a KPMG report that AMCON had commissioned.

He added that audits for 2015 and 2016 were carried out by PwC Nigeria, the company’s longstanding auditors who were previously hired by Johnson Arumemi-Ikhide.

He pointed out that these audits verified that Arik had been declared technically bankrupt since 2014, with its liabilities surpassing its assets in 2015 and 2016 until the receivership was initiated in 2017.

“Arik’s negative shareholder capital was N139 billion as of December 2016, which is almost equal to its debt to AMCON,” Nwauzor continued.

He added that Johnson Arumemi-Ikhide, the founder of Arik, has continuously promoted a false narrative about his debt to AMCON, among other misleading assertions. He said that Arik never fell behind on its payments to Union Bank and pretended to be unaware of the sum owing to AMCON.

According to Nwauzor, Arumemi-Ikhide has also asserted that his loan was performing and that the receivership was premature.

“These assertions are deceptive. The intelligent public must wonder why the debt was sold and restructured if it was performing. And why did he consent to the reorganization? Did he meet the terms that were agreed upon?

In accordance with the Central Bank of Nigeria’s (CBN) Prudential Guidelines, Union Bank of Nigeria PLC (UBN) decided to declare the loan non-performing and sell it. AMCON voluntarily accepted Union Bank’s offer of the Arik loans and legally bought them.

UBN notified Arik in a letter dated October 22, 2010, that its loans, totaling an astounding $474 million (about N70 billion at the time), were non-performing and threatened the stability of the bank. One of the main causes of Union Bank’s financial difficulties was this loan exposure.

“It is significant to remember that in addition to Union Bank, Bank PHB (now Keystone Bank) also sold Arik’s loans to AMCON, and Arumemi-Ikhide has acknowledged this debt on multiple occasions,” he said.

He added that Arumemi-Ikhide voluntarily consented to restructure the debts after the loans were purchased, admitting the debt.

“Any challenge to AMCON’s purchase of the NPLs is, in any case, statute-barred, and the AMCON Act contains clauses that show that such a challenge cannot give rise to a legitimate cause of action.

“In any case, AMCON had extensive discussions with Arik’s management from 2011 to 2017 (who never questioned the NPLs), yet Arik continuously missed payments in spite of multiple financial concessions, promises of debt reduction, and restructuring initiatives. He stated that AMCON was forced to think about different recovery alternatives.

Nwauzor added that Arik was beset by operational issues, including as insufficient financial reserves, grounded aircraft, and growing indebtedness, when AMCON’s Receivership Team took over.

“Arik was in financial trouble and about to go out of business when the Receivership Team took over. A number of aircraft were grounded, and service providers stopped providing assistance due to outstanding bills.

The company also stated that Arik’s on-time performance (OTP) fell below 40% due to operational difficulties, which resulted in numerous flight cancellations.

“The team discovered a fleet with only eight operational aircraft when they took over the company, as opposed to the erroneous thirty being floated about.” A spokesperson for AMCON said, “A number of the aircraft needed immediate maintenance, and others had been pledged as security for Sir Johnson’s personal debts, which resulted in their seizure by creditors.”

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Court Allows Repossession Of Arik Air’s CRJ1000

TheNigerian — Sat, 04 Jan 2025 07:19:23 +0000

Federal High Court sitting in Lagos has granted Export Development Canada (EDC), a Canadian financial institution, the right to repossess and teardown the controversial CRJ1000 aircraft with registration number 5N-JEE from Arik Air’s fleet.

The court also stopped men and officers of the respondent (Economic and Financial Crimes Commission) from harassing, threatening, intimidating, detaining and threatening to arrest the applicants or its contractor over the discharge of their lawful civil obligations to take custody, control and teardown of the aircraft.

These were contained in a certified true copy of a judgment delivered by Justice Alexander Oluseyi Owoeye on November 27, 2024, in a suit number: FHC/L/CS/1141/2024 between Capt. Samuel Caulcrick, Captain Isiaka Oyeshina Akinfenwa (applicants) Vs Economic and Financial Crimes Commission (EFCC) as respondent, obtained by Daily Independent Newspaper.

This Federal High Court judgment is coming barely 18 months after the issue first came to the public knowledge when some of the shareholders of Arik Air, using the EFCC, prevented the original owner of the aircraft from repossessing it.

Chris Amokwu, an aviation expert, has also said that compliance with Nigeria to the court judgment would go a long way in determining the country’s compliance with the Cape Town Convention on aircraft leasing, which it recently signed.

The court in its judgment declared that the acts by the men and officers of the respondent of arresting, harassing, threatening, questioning, intimidating, detaining and threatening to arrest and detain the applicants over the discharge of their lawful civil obligation to take custody of the aircraft with the Manufacturer’s Serial Number (MSN)’ 19037 for the onward shipment and disposal constituted a violation of the applicants’ fundamental rights under the Section 34 of the 1999 Constitution (as amended).

The court also said that these infractions constituted a violation of the applicants’ Fundamental Rights to liberty under Sections 35 of the 1999 constitution (as amended) and Article 6 of the African Charter on Human and Peoples’ Rights Act, Cap A9, Volume 1, Laws of the Federation of Nigeria 2004.

The court’s judgment further stated that the exhibit presented to the EFCC to investigate by the owners of Arik Air did not cover the CRJ1000 aircraft.

Rather, it said the exhibit presented to EFCC covered only the sale and teardown of another aircraft; CRJ900 MSN 15058 with the registration number 5N-JEA, valued at $31,000,000.00 and Boeing 737-700 with the MSN number 23640 and registration number: 5N-MJI valued at $47,000,000.00, which were sad to be “destroyed and sold without owner’s consent and regulatory approval.”

Besides, the court awarded the sum of N5 million as damages against the respondent for the infringement and threatened infringement of the applicants’ rights to dignity of the human person and personal liberty over the discharge of their lawful civil obligations to take custody and control, and teardown the Canadian aircraft.

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