MTN Nigeria, a leading telecommunications company operating in the West African country, is making moves to resolve a financial dispute with the Central Bank of Nigeria (CBN).
The Central Bank of Nigeria (CBN) had alleged an improper return of $8.1 billion between 2007 and 2015 by MTN Nigeria Communications Limited (MTN Nigeria).
MTN Nigeria has held various engagements in order to find an equitable resolution to the matter. In particular, a series of meetings were held in Lagos with CBN officials during November 2018. At these meetings MTN Nigeria provided additional material documentation which satisfactorily clarified its remittances.
“Upon review of the additional documentation the Central Bank of Nigeria concluded that MTN Nigeria is no longer required to reverse the historical dividend payments made to MTN Nigeria shareholders,” MTN Nigeria said in a statement issued this week.
“However, the CBN maintains that the proceeds from the preference shares in MTN Nigeria’s private placement remittances of 2008 of approximately $1 billion were irregular having been based on Certificates of Capital Importation (CCIs) that only had an approval-in-principle, but not final regulatory approval of CBN,” the company added.
CCI’s are Central Bank of Nigeria certificates issued by banks for importation of cash.
The Central Bank of Nigeria instructed MTN Nigeria to implement a notional reversal of the 2008 private placement of shares in MTN Nigeria at a net cost of circa N19.2 billion – equivalent to $52.6 million (the notional reversal amount). This is on the basis that certain certificates of capital importation (CCIs) utilised in the private placement were not properly issued.
MTN Nigeria and the CBN have agreed that they will resolve the matter on the basis that MTN Nigeria will pay the notional reversal amount without admission of liability. In terms of the resolution agreement, the CBN will regularise all the CCIs issued on the investment by shareholders of MTN Nigeria of an estimated $402.6 million without regard to any historical disputes relating to those CCIs, thereby bringing to a final resolution all incidental disputes arising from this matter.
MTN Nigeria relied on certain commercial banks to ensure all approvals had been obtained prior to the CCIs being issued and to ensure the CCIs were properly utilised in the private placement. MTN Nigeria will be engaging with the banks in relation to the issues dealt with in the resolution agreement.
The group stated that as a result, shareholders are no longer required to exercise caution in dealing with the Company securities. The Company said it will release a fresh announcement on the matter as soon as possible to allay any fears that shareholders may harbor.