Tough talking AMCON vows to recover N227.64bn Arik Air debt

• Corporation releases aircraft inventory

Sade Williams/Business a.m.

A tough talking Asset Management Corporation of Nigeria (AMCON) vowed on Friday to recover N227.64 billion being owed by Nigerian domestic carrier Arik Air, stressing that it would not be intimidated by the debtor’s harassment, alleged sponsored media attacks, and resistance to fulfill its obligations.

Jude Nwauzor, head, corporate communications at AMCON, during a Lagos press conference, said the corporation needed to correct some misinformation about the operations of the airline since it took over on February 9, 2017, adding that the agency had been injecting money into Arik Air in the last eight years.

Nwauzor also disclosed that AMCON did not only take over Arik Air from its owner, Johnson Arumemi-Ikhide, but also took over three other companies: Rockson Nigeria Limited (a power infrastructure company), Ojeimai Farms Limited, and Ojemai Investment Limited, belonging to him for the non-performing loans.

“The task of debt recovery has been arduous and challenging. While several thousands of Nigerians and Nigerian companies have honoured their obligations, AMCON continues to face resistance from a number of debtors who are unwilling to pay without a fight. One of these debtors is Arik Air Limited (in Receivership), an airline company owned by Sir Johnson Arumemi-Ikhide, who is also the promoter of Rockson Nigeria Limited (a power infrastructure company), Ojeimai Farms Limited, and Ojemai Investment Limited. These companies’ debts were transferred by various banks to AMCON due to their non-performance, with a total indebtedness of N455, 171, 764, 772.80 as at December 31, 2024.

“Arik owes AMCON N227,637,469,394.34; Rockson Engineering N163,502, 837, 397.75 and Ojemai Farms N14, 031, 457, 980.71. The fact of the matter is that no matter the smear campaign he is sponsoring against AMCON, these debts must be recovered one way or the other. The leadership of AMCON knows that there is no nice way of recovering debt. For that, obligors go to any length to assassinate the characters of both AMCON staff and management, they malign the name of AMCON, intimidate, and harass our personnel with every arsenal at their disposal,” he explained.

The agency which alleged that the founder of Arik Air had sponsored several inaccurate claims and reports on payment obligations to Union Bank while feigning ignorance of the debt owed to AMCON said: “The decision to classify the loan as non-performing and to sell it was made by Union Bank of Nigeria PLC (UBN), in accordance with the Prudential Guidelines set by the Central Bank of Nigeria (CBN). Union Bank willingly offered the Arik loans to AMCON, which purchased the loans in compliance with the law.

“In a letter dated October 22, 2010, UBN informed Arik that its loans, which amounted to a staggering $474 million (approximately ₦70 billion at the time), were non-performing and posed a threat to the bank’s stability. This loan exposure was a significant factor in Union Bank’s financial challenges,” he said.

Setting the records straight, Nwauzor revealed further that against claims by the founder of the airline that 30 aircraft were serviceable before AMCON’s intervention, only nine of the aircraft were serviceable.

AMCON’s documents revealed the status of the aircraft at the time it took over in 2017 as follows:  5N-MJA, B737-300 (abandoned in Norwich, UK);  5N-MJB, B737-300 (abandoned in Southend, UK) 5N-MJC, B737-700 (extensively cannibalised in Lagos); 5N-MJD, B737-700 (extensively cannibalised in Lagos); 5N-MJG, B737-700 (required spare parts to return to service); 5N-MJI, B737-700 (abandoned in Malta);  5N-MJO, B737-800 (one engine was unserviceable due to excessive oil leak);  5N-MJP, B737-800 (abandoned in Johannesburg, South Africa); 5N-MJQ, B737-800 (abandoned in Malt); B737-700, 5N-MJK in Lagos and in long-term storage; B737-700, 5N-MJD in Lagos, in long-term storage (about to be repossessed by the bank); B737-700, 5N-MJC, in Lagos and long-term storage (about to be repossessed by the bank); Q400, 5N-BKX located in Lagos and serviceable; Q400, 5N-BKW located in Lagos and serviceable; B737-700 in Addisbans serviceable (C-Check ongoing); B737-800 in Lagos and serviceable; Q400, 5N-BKV in Lagos but long-term storage (scrap), among others.

The corporation revealed that beyond Union Bank, Arik’s loans were also sold to AMCON by Bank PHB (now Keystone Bank), adding that  Arumemi-Ikhide has, on several occasions, admitted to this indebtedness.

“Following the purchase of the loans, Sir Johnson willingly agreed to restructure the loans, acknowledging the debt.  A KPMG report commissioned by AMCON revealed that Arik was balance-sheet insolvent, with a negative equity value of approximately ₦80 billion and total liabilities amounting to ₦289 billion as of December 31, 2016.

“Additionally, PwC Nigeria, the company’s long-standing auditors (previously appointed by Sir Johnson Arumemi-Ikhide), conducted audits for the years 2015 and 2016. These audits confirmed that Arik had been technically insolvent since 2014, with its liabilities exceeding its assets throughout 2015 and 2016, up until the commencement of the receivership in 2017. As of December 2016, Arik’s negative shareholder capital stood at ₦139 billion, nearly equivalent to its debt to AMCON.

“During this period, Arik’s operations were severely compromised. Between November 2016 and January 2017, Arik faced numerous challenges, including the cancellation of flights, inability to fulfill ticketed obligations, and a suspension of operations due to failure to pay for insurance. The airline was also engaged in protracted disputes with NCAA, FAAN, and NAMA, with combined claims of about ₦30 billion.

“The government, concerned about the safety of the airline, the welfare of over 1,500 employees, and the stability of the aviation industry urged AMCON to intervene. As a result, AMCON appointed a Receiver-Manager in compliance with the AMCON Act to stabilise the operations of Arik,” Nwauzor added.