N29BN DEBT OWED BY NITEL WORRIES TRANSCORP

Mergers, Acquisitions and Financial Results

Transnational Corporation of Nigeria Plc (Transcorp) has unfolded business transformation plans aimed at repositioning its business portfolios, meeting stakeholders' expectations and competing favourably in the global economy.

The new agenda, which has been approved by the Board of the Conglomerate, is expected to reinvigorate its businesses and recover a whooping N29 billion debt owed its major subsidiary, Nitel.

Group Managing Director and Chief Executive Officer of Transcorp, Tom Iseghohi, disclosed that under the new plan, Transcorp will be organized by business in units to facilitate the speed of transformation of acquired businesses such as the Nigerian Telecommunications Limited (NITEL), the Mobile Telecommunications Limited (MTEL) as well as acquired Oil blocks.

Iseghohi explained that a restructured Transcorp will be better positioned to focus on development of the conglomerates key business areas which spans telecommunication and information technology, oil and gas, hotel and tourism, agriculture as well as international trade.

As part of the repositioning initiative, Executive Directors of Transcorp have been assigned to direct the conglomerate's focus on some of the initiatives which offer immediate and dynamic growth opportunities and signify the repositioning of the conglomerate on the path to delivering enhanced stakeholder value.

Anthony Ofili, group executive director, finance and administration will join NITEL as interim chief financial officer with the responsibility of reorganising the company's finances and taking charge of its assets and liabilities, particularly recovering NITELís estimated debt of about N29 billion.

Whilst Transcorp now clearly has a management plan, there are still a number of questions that will not go away. How will Transcorp be able to recover the estimated N29 billion it is owed? A great deal of it is probably rather elderly and some large part of it can undoubtedly be placed at the government’s door. Along with other African Governments, the Nigerian Government has yet to acquire the habit of paying its bills on time or indeed paying them at all.

Without better cash-flow, how will it pay its creditors as bills become due? It is reported to have paid off its SAT3 debt to Telkom but how long before this builds up again? Well-placed sources say that it was negotiating with a rival company to get this debt paid in exchange for that company’s access to more SAT3 bandwidth for resale. Finally, where is the investment capital going to come from to transform the company? Answers on a postcard please to Anthony Ofili, Interim CFO, Nitel.

(SOURCE: This Day)