‘$81m cash, $123m loan invested in Abuja DisCo’s acquisition’
CEC Africa yesterday, in Abuja, said the company paid $81 million cash and raised $123 million loan security before acquiring Abuja Electricity Distribution Company (AEDC).
Reacting to report of prevailing shareholders’ dispute at KANN Utility Company Limited (KANN), the majority shareholder of AEDC, Managing Director, CEC Africa Investment Limited, Emmanuel Katepa said KANN’s two shareholders; CEC Africa Investments Limited and Xerxes Global Investments Limited had agreed to jointly bid for the purchase of 60 per cent equity stake in AEDC, adding that both firms executed a Joint Development Agreement to incorporate and become shareholders of KANN in the acquisition of the 60 percent shareholding of AEDC.
Speaking on recent issues in the partnership, he said while CECA and Xerxes had agreed to own and hold 50 per cent each of the shares of KANN and that each of the two parties would make equal financial contribution towards the acquisition amount and costs with regard to the purchase of 60 per cent shares of AEDC the partner did not keep the promise.
Katepa, who noted that the purchase price of AEDC was $164 million and that it was initially agreed by XerXes and CECA that this would be funded 25 percent ($41 million) by cash contributions from Xerxes and CECA (in their 50 per cent/50 per cent shareholding interest) and KANN would borrow the remaining 75 per cent of the acquisition costs ($123 million) from a third party lender, Katepa said Xerxes could not raise its equity contribution leaving CECA to fully fund the payment.
“By August 2013, the 75 per cent balance payment of $123 million was due but Xerxes could still not guarantee the equity loan repayment. Because of this, CECA provided a mandatory Debt Service Reserve Account of $40 million as a security cover for the te loan. At this point, CECA had funded $41 million paid directly to the BPE and an additional $40 million for the Debt Service Reserve Account.
Katepa, who was reacting to some media report on the issue, stated that XerXes does not have best industry knowledge to effectively manage the DisCo, stressing that there was need for a mix of few experienced expatriates until when the sector is robust.
“Currently, the crop of expatriates is changing the company’s operation to embrace advancements and the local management staff would need to be carried along by the expatriates who have the experience. This is why AEDC is ahead in the Meter Assets Provider (MAP) and had installed over 70 percent meters of the total installation by all the DisCos since MAP commenced this year. We have another breakthrough which is the Integrated Commercial and Management System (INCMS) and we are the first DisCo in Nigeria to have that.
“Globally, operators who want the best for their company must look beyond unqualified allies but transparently seek for the most competent persons through competitive recruitment and procurement processes,” Katepa said.
He said while disagreement started in 2013 leading to legal issues, CECA won a London arbitration as AEDC core investor on the challenges with KANN shareholders meeting, Katepa said with some unresolved issues, CECA felt there was need for the shareholders of KANN Utility to hold its annual meeting to discuss way forward but Xerxes said it has already appealed the rulings of the London Arbitration Court and the judgement delivered by a Federal High Court in Abuja, recognising CECA as the owner of 75 percent of the shares in KANN.
“XerXes said the Extraordinary General Meeting will not hold because it was not in its interest. Since 2017, through 2018 when it appealed the matter and in 2019, the meeting did not hold,” he said.
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