• Contact Us
  • About Us
Friday, August 1, 2025
  • Login
MetroBusinessNews
  • Home
  • Economy
  • Politics
  • News
  • Companies and Markets
  • Energy
  • Sports
  • Real Estate
No Result
View All Result
  • Home
  • Economy
  • Politics
  • News
  • Companies and Markets
  • Energy
  • Sports
  • Real Estate
No Result
View All Result
MetroBusinessNews
No Result
View All Result
ADVERTISEMENT
Home Banking

Junk-rated Seven Energy $445m facility threatens banks health

metro by metro
October 31, 2016
in Banking
0
Nigerian Banking Industry Seen in ‘Full-Blown’ Credit Crisis-Report
0
SHARES
0
VIEWS
The health of some major Nigerian banks is being threatened by a recent default on a facility granted to one of their prime customers, Seven Energy Nigeria Limited (SENL), a privately held oil and gas exploration and development company with headquarters in Lagos, Nigeria.
 
Ecobank Nigeria Limited, FCMB , and Union Bank Plc were among the syndicate of banks that, on July 15 2016, granted a $445 million Senior Debt Facility to Accugas Limited, a wholly owned subsidiary of SENL, to refinance existing facilities and support medium-term capital requirements, but the facility is turning to a bad loan for the banks.
 
SENL, which has been having liquidity challenges as its 2016 half year free cash flow reached a record negative US$ 81 million, has defaulted on all its facilities, including those of the banks, raising concerns among analysts about renewed pressure on banks’ loan portfolio quality.
 
“The development is not good for the banking sector”, said an analyst who did not want to be named, adding, “but the situation is not new, as some of the banks anticipated the default and therefore took the hit by provisioning for it”.
 
Continuing, the analyst said, “other banks may not have made such provisions, but overall, the problem is not peculiar to Seven Energy, as other oil and gas companies have also defaulted on their facilities”.
 
In a move to manage the feelings of its creditors, Seven Energy has initiated a series of save-our-soul pleas to its lenders, culminating in an agreement for coupon capitalisation by 77 percent of its bondholders.
 
SENL disclosed in statement in Lagos, that “the company is continuing to engage and cooperate with note holders in this regard and the necessary parties have agreed to extend further, the deadline for the launch of the Agreed Transaction Consent Solicitation until 10am (Brussels time) on Wednesday, November 2, 2016 in order to facilitate this process”, in reference to its variously-couponed US$400 million Senior Secured Notes due 2021.
 
Fitch, a foremost credit rating agency, had downgraded the credit rating of SENL from CC, reflecting very high levels of risk to C, and indicating that the company has exceptionally high-risk levels.
Citing weak cash flows, precarious liquidity position, and weak recovery outlook, Fitch noted, “the downgrade follows Seven Energy’s recent announcement that it has started restructuring negotiations for its USD300 million secured notes and USD100 million secured private notes. It involves the coupon capitalisation for up to four periods, starting from October11, 2016 subject to certain conditions.”
 
Ultimately, the precise implication of the SENL facility default on the banks will become clearer when the banks involved release their results.
 
Calls made and mails sent to Seven Energy to ascertain the true position of the banks’ facilities were not answered.
 
“We don’t know whether the banks have incorporated the default scenario in their results. Of the banks that have loan exposures to Seven Energy, only Union Bank and Ecobank have released results”, said analysts from Cordros Capital, a Lagos-based investment bank.
 
“We expect to get more information on the effect of the news on its balance sheet during banks conference calls scheduled for next week.”
 
Ecobank’s third quarter (Q3), 2016 results saw impairment losses on loans and advances surging by 67 percent to N49 billion ($205.5 million), from N29.5 billion ($149.7 million), in 2015.
 
Union Bank’s impairments were up 190 percent to N12.8 billion in the third quarter of 2016, compared to N4.4 billion in 2015 as its Non Performing Loan ratio increased to 9.4 percent from 7 percent in December 2015.

Read Also

Zenith Emerges Nigeria’s Standout Performer, Clinches Euromoney Awards For Excellence 2025 As Country’s Best 

Banking Industry Frets Over Recapitalization, Capital Restoration Plans As Cloud Of Ucertainty Hangs On Govt Banks

Zenith Retains Nigeria’s Best Tier-1 Capital Bank For Sixteenth Consecutive Yr In 2025 Top 1000 World Bank’s Ranking

Previous Post

Nigeria faces debt trap with $30 billion borrowing plan

Next Post

New emerging Islands set to compete with Banana Island and VGC

Related Posts

Zenith Retains Nigeria’s Best Tier-1 Capital Bank For Sixteenth Consecutive Yr In 2025 Top 1000 World Bank’s Ranking
Banking

Zenith Emerges Nigeria’s Standout Performer, Clinches Euromoney Awards For Excellence 2025 As Country’s Best 

July 21, 2025
Banking Industry Frets Over Recapitalization, Capital Restoration Plans As Cloud Of Ucertainty Hangs On Govt Banks
Banking

Banking Industry Frets Over Recapitalization, Capital Restoration Plans As Cloud Of Ucertainty Hangs On Govt Banks

July 11, 2025
Zenith Retains Nigeria’s Best Tier-1 Capital Bank For Sixteenth Consecutive Yr In 2025 Top 1000 World Bank’s Ranking
Banking

Zenith Retains Nigeria’s Best Tier-1 Capital Bank For Sixteenth Consecutive Yr In 2025 Top 1000 World Bank’s Ranking

July 5, 2025
TAJBank Sustains Industry Feat, Pays 3rd Dividend In 5 Yrs
Banking

TAJBank Sustains Industry Feat, Pays 3rd Dividend In 5 Yrs

June 30, 2025
Next Post
New emerging Islands set to compete with Banana Island and VGC

New emerging Islands set to compete with Banana Island and VGC

Nigerian Nurses Strike For Pay, Staffing As Talks Collapse

Nigerian Nurses Counter FG, Say Strike Still On

August 1, 2025
Apprehension As ASUU Begins Nationwide Strike Over Unpaid Salaries

Academic Activities Paralyse As ASUU, SSANU, Others Commence Indefinite Strike In LASU

August 1, 2025
Nigerian Nurses Call Off Strike After Meeting FG

Nigerian Nurses Call Off Strike After Meeting FG

August 1, 2025
MetroBusinessNews

© 2022 Metro Business News

Navigate Site

  • Contact Us
  • About Us

Follow Us

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Home
  • Economy
  • Politics
  • News
  • Companies and Markets
  • Energy
  • Sports
  • Real Estate

© 2022 Metro Business News

Go to mobile version