Heritage to acquire Enterprise Bank for N56bn

Ifie Sekibo*Fidelity Bank is reserve bidder

12 September 2014, Abuja – AMCON to divest from more banks next month, records N637bn loss Obinna Chima After a fierce contest spanning over several months for the acquisition of Enterprise Bank Limited, Heritage Bank Limited yesterday emerged the preferred bidder for the commercial bank that is wholly owned by the Asset Management Corporation of Nigeria (AMCON).

However, a reliable source at AMCON who revealed this on the condition of anonymity said Fidelity Bank Plc emerged as the reserve bidder for Enterprise Bank.

The source put the winning bid submitted by Heritage Bank for the acquisition of Enterprise Bank at N56 billion.

He also revealed that under the terms of the Share Purchase Agreement (SPA), which would be signed on September 19, 2014 between AMCON and Heritage Bank, the bank would be expected to pay 20 per cent or N11.2 billion of the bid price for Enterprise Bank 48 hours (September 21) after the execution of the agreement.

The balance of 80 per cent or N44.8 billion would be paid by October 13, he said. Should Heritage Bank fail to meet the payment terms, Fidelity Bank will take its place as the preferred bidder.

Heritage Bank commenced operations in March 2013. The deposit money bank was formed from the defunct Societe Generale Bank of Nigeria (SGBN) and was granted a regional banking licence by the Central Bank of Nigeria (CBN).

On commencement of business, its shareholding structure was 80 per cent core investor, nine per cent legacy bank, and 11 per cent of depositors’ funds. The bank has continued to portray itself as an SME-focused financial institution. Confirming Heritage’s emergence as the preferred bidder, AMCON in a statement last night by its Head of Corporate Communication, Kayode Lambo, said: “The completion of the transaction is subject to the fulfillment of the conditions precedent as stated in the Share Purchase Agreement (SPA) that is to be executed between AMCON and HISL (the investment vehicle owned by Heritage Bank).

“In the event that HISL is unable to complete the transaction in line with the payment terms and other provisions of the SPA, the SPA entered into with HISL would be terminated and Fidelity Bank would become the preferred bidder.” AMCON said the process for the sale of Enterprise Bank started with interest shown by 24 parties cutting across local and international bidders.

“The emergence of HISL and Fidelity Bank as preferred and reserve bidders respectively resulted from a rigorous and competitive bidding process, which was coordinated for AMCON by Citigroup Global Markets Limited and Vetiva Capital Management Limited (Financial Advisers) and G. Elias & Co. (Legal Advisers),” AMCON said.

In a related issue, following its successful divestment from Ecobank Transnational Incorporated (ETI), with the sale of its 12.5 per cent minority stake in the bank to Doha-based Qatar National Bank (QNB), AMCON yesterday disclosed plans to divest from more banks and quoted companies before the end of next month. The Executive Director, Finance and Operations, AMCON, Mrs. Mofoluke Dosunmu, said this while commenting on the corporation’s 2013 financial results made available to THISDAY yesterday.

The results, the corporation’s third full operational year since it undertook its mandate to stimulate the recovery of the Nigerian financial system, showed that AMCON once more recorded a total comprehensive loss of N636.79 billion in the year under review. Also, while AMCON’s total assets stood at N1.75 trillion, its total liabilities in the year under review stood at N5.21 trillion. AMCON’s net fee and commission income in the period under review was N1.27 billion.

Shedding light on the loss recorded by the corporation, Dosunmu explained: “If you look at the track record of resolution vehicles across the world, the turnaround time is around 10 to 15 years and so it will take some time for AMCON to start making profits.”

Responding to a question on the likely impact of the ongoing sale of Enterprise Bank Limited and other assets on AMCON’s balance sheet, the executive director said: “When you sell an asset, it doesn’t go into profit. The only time it would have gone into profit is if you made a margin on the sales and I am sure you know how much we put into those banks to bring them back to profitability.

“However, there would be cash flow from the sale that would help us in the bond repayment.”

According to AMCON’s financial statement that was prepared in accordance with International Financial Reporting Standards (IFRS), AMCON’s bonds of N4.5 trillion face value were redeemed in December. The bonds were partly refinanced by a loan of N3.8 trillion from CBN.

AMCON is expected to redeem the third tranche of its bonds held by private investors valued at N866.73 billion by next month. After the redemption next month, the CBN would be the only bondholder in AMCON.

The corporation’s bonds held by banks and other private investors, which amounted to N734.09 billion, were redeemed on December 31, 2013, in line with the terms of the indenture, while bonds of N3.51 trillion held by the CBN, were restructured into a N3.80 trillion note at six per cent, with a 10-year tenor.

The Eligible Bank Assets (EBAs) acquired by AMCON also stood at N2.37 trillion as at the end of December 2013, down from N2.72 trillion at the end of June 2013. Also, restructured loans amounted to N374.35 billion as at December 31 last year, of which 55.75 per cent were performing, while 44.25 per cent were non-performing.

Similarly, total recoveries at the end of December last year were N164.5 billion.

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