Home Business Spectrum Wireless Warns Investors Off 9Mobile

Spectrum Wireless Warns Investors Off 9Mobile

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  • As Court Nullifies Order Approving Interim Board

By Nse Anthony-Uko
(Sundiata Post) – Spectrum Wireless Communication Limited has issued a ‘Buyer Beware’ to investors seeking to acquire 9Mobile Network, warning it would be at their own risk
Solicitors to Spectrum Wireless, in a public notice, warned that by virtue of the said judgment, Dr. Joseph Nnanna, Oluseyi Bickersteth, Ken Igbokwe, Funke Ighodaro and Boye Olusanya as security trustee nominee of the board of Emerging Markets Telecommunications Service has been nullified and the order appointing them vacated.

The Solicitors warned that any institution or company who transacts business for the purpose of sale or acquisition of EMTS or 9Mobile does so at his or her own risk.
The Federal High Court, sitting in Ikoyi, Lagos, has nullified the ex parte order approving the appointment of an interim board for Nigerian telecom operator, Emerging Markets Telecommunications Service, EMTS, Nigeria’s fourth largest telecommunications service operator, which until last year was operated as Etisalat but now runs as 9Mobile.
The nullification followed the dismissal of the Preliminary Objection filed by United Capital Trustees Ltd in response to the application by Spectrum Wireless, a shareholder of EMTS.
Justice Buba in his judgment said that the motion is struck out having set aside the order adding that “the respondent shall reverse all steps taken by it since the order was nullity.


Spectrum had claimed that the order was obtained by misrepresentation of facts that alienated its interests in the EMTS saying its application was for a nullification of the ex parte order by Justice Ibrahim Buba of the Federal High Court.
The interim board and executive management of the EMTS were constituted in June 2017 but the order approving its reconstitution was given in July.

Recall that the Interim Board of EMTS, which has the support of the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC), had recently received bids from about 5 bidders in its intended sale of the company which was to be concluded by 31 December, 2017, but recently moved to 16 January, 2018.
This was because the Etisalat Group, which held 45 per cent of the shares in Etisalat Nigeria and 25 per cent of the preference shares, had earlier relinquished its stake in the Nigerian firm over $1.2 billion debt being owed 13 Nigerian banks leading to the constitution of an interim board by the CBN and NCC after it announced a name change to 9Mobile.
However, solicitor to Spectrum Wireless Communication Limited in a public notice warned that by virtue of the said judgment, Dr. Joseph Nnanna, Oluseyi Bickersteth, Ken Igbokwe, Funke Ighodaro and Boye Olusanya as security trustee nominee of the board of Emerging Markets Telecommunications Service has been nullified and the order appointing them vacated.
The Solicitors warned that any institution or company who transacts business for the purpose of sale or acquisition of EMTS or 9Mobile does so at his or her own risk.
Justice Buba in his judgment said that the motion is struck out having set aside the order adding that “the respondent shall reverse all steps taken by it since the order was nullity.”

 

Emerging Markets Telecommunications Service (EMTS), popularly known as Etisalat, is the fourth largest telecommunications service provider in Nigeria after MTN, Globacom and Airtel.

The company secured a telecommunications licensee in 2007 and has grown in leaps and bounds and exceeded expectations of many as a new entrant into the tightly competitive industry. It has equity participation by local and foreign investors and in 2011, secured facilities from a consortium of domestic banks under the auspices of United Capital Trustees Ltd (United Capital) to the tune of N115.6bn and $235m. Default however on the part of EMTS to service the facilities elicited recovery action by United Capital. The sensitivities of such action to the health of the Nigerian financial system, the telecommunications sector and the economy in general, precipitated tempered action with the consent of the respective sector regulators, the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) to avert possible adverse impacts. There was anxiety in some quarters and fears that such action smacked of a takeover of the company by the Government, a move that could bring undue preference to the company that could disrupt or distort competition that has been instrumental to the vibrancy of the telecommunications sector.

Following the exit of Etisalat and it’s Directors in unclear circumstances in June 2017 from EMTS, United Capital initiated action and received approval of the court through an Ex Parte Motion dated 3 July 2017 to appoint a Transitional Board comprising among others, Joseph Nnanna (CBN) as Chairman, Boye Olusanya as Managing Director, and Funke Oghodaro as Chief Financial Officer to superintend over the affairs of the company. The Transitional Board has since proceeded to rebrand the company as 9mobile and taken further action to announce a bid for the sale of the company to interested investors. The bid was intended to be concluded with handover of EMTS to the preferred or successful bidder by 31 December, 2017 but has since been extended to 16 January, 2018.

Concerned that the action of United Capital did not take into consideration their stake in EMTS, other (non-bank) investors in EMTS led by Spectrum Wireless, approached the court in December 2017 to challenge the Ex Parte Order granted in favour of United Capital on 3 July 2017. This culminated in the Court Ruling of 12 January, 2018 which discharges (sets aside or nullifies) the prior Court Order of 3 July 3017 on grounds among others that it was granted based on a misrepresentation of facts made available to the court at the time.

The decision of the Court paves the way for more inclusive discussions with all the shareholders and investors of EMTS to reach a broad based resolution on the future of the company that would give due consideration to the interests of all stakeholders.

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