AMCON Recovers N134bn Debt, Trims Loss to N254.34bn in 2016

•  To sell PAN to Dangote, Kaduna and Kebbi states

By Chika Amanze-Nwachuku and Obinna Chima

The Asset Management Corporation of Nigeria (AMCON) yesterday put the total of its debt recoveries in 2016 at N134 billion.

The corporation, which disclosed this while unveiling its 2016 financial accounts, however, explained that not all the total amount it said it recovered last year was in cash.

The Head, Finance & Budgeting, AMCON, Mr. Olugbenga Ataiyero, while speaking during an interactive session with journalists in Lagos, explained that while N86.9 billion came from cash collection, the amount realised from some obligors that felt that they could settle outstanding obligation through forfeiture of their assets was about N30.4 billion and property sales was about N8 billion.

The corporation’s financial statement showed that AMCON as a company was able to reduce its loss position from N304.2 billion in 2015, to N254.34 billion in 2016.

However, due to losses suffered from of its subsidiaries, the Group total loss increased to N352.15 billion in 2016 from N295.45 billion in 2015.    

The AMCON subsidiaries are Peugeot Automobile Nigeria Limited (PAN), Consolidated Discount House Limited, Aero Contractors and Keystone Bank (as at December 2016).

AMCON said it made gains of N27.15 billion on fair value of its unstructured loans.

It said it recorded efficiency in loss reduction. For instance, its credit loss expense reduced by N37 billion in the year under review, just as fair value on its property reduced from N20.26 billion in 2015, to N116 million in the review year. The corporation, through cost saving measures, was able to reduce its expenses by N8 billion.

Ataiyero said the amount that has been contributed by banks into the sinking fund as at date was N913 billion.

“The projection was that the banks were going to grow at 20 per cent, which never came to pass. So, the contribution that we expected from the sinking fund was not up to what we had budgeted. In 2016, we had envisaged that the banks would have contributed about N288 billion, but they actually contributed only N136 billion. 

“So, that was enough for us to pay down the principle. What we did was just to service the interest of our loan from the CBN. We pray that the contribution to the sinking fund would improve and then our losses would begin to go down. It would have been much better for us as an entity if the contribution from the sinking fund came in through our profit and loss account. But that was not the case. We argued with our auditors and they said it can only go into the reserves.

“So, while we suffer interest expense, the contribution that would have further brought down the losses, could not come through our profit and losses. But it went into our balance sheet through reserves,” he said.

Furthermore, he said the major loss driver was the over N5.7 trillion loan which the corporation had financed at six per cent interest rate.

Earlier, the CEO of AMCON, Ahmed Kuru, reiterated that the corporation was not set up to make profit, but as a resolution vehicle.

“We have stopped putting money into businesses that we takeover in the last two years. The only exception was Arik and that was for obvious reasons. The next four years is going to be critical for AMCON,” he said.

Kuru further said the corporation has stopped acquiring bad loans.

“We have engaged all obligors to come and sit down and discuss with AMCON and people have been made to realise that they must pay their debts,” he added.

In addition, Kuru said the corporation is close to selling Peugeot Automobile Nigeria to the President of the Dangote Group, Alhaji Aliko Dangote, Kaduna and Kebbi states.

“We have concluded all processes on the bids since about two months ago, all we are waiting for (now) is the approval of the central bank,” Kuru said.

Dangote, in alliance with the states of Kaduna and Kebbi and the Bank of Industry (BOI) development bank made a bid to acquire a majority stake in PAN last year as AMCON seeks to sell off some of the assets it acquired in the wake of the banking crisis.