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Aiteo owes Shell, banks $1.7b – Report

ACCORDING to the impacted institutions, AITEO Eastern E&P owes Shell Plc and seven banks $1.7 billion, and if the loan is not paid, it will have an impact on the Nigerian financial system.

According to Bloomberg, Aiteo Eastern E&P Co. paid $2.4 billion seven years ago for a pipeline and an operating interest in one of the country’s most expensive onshore oil blocks.

Zenith Bank Plc, Fidelity Bank Plc, Guaranty Trust Bank Plc, and other Nigerian lenders supplied a $1.5 billion loan to assist the acquisition, while Shell, the asset seller, provided $504 million in funding.

Since October 2019, when Aiteo’s creditors notified it that company was in default, the parties have been embroiled in a convoluted court battle.

Based on a judgement by the English commercial court on April 1, the amount owed had risen to $1.7 billion by the end of last year, up from less than $300 million in late 2019.

The increase in the loan amount was attributed to missing payments, unpaid interest, and default penalties, according to the lenders. Before an arbitration dispute against Aiteo in late 2020, when the amount was $910 million, the financiers had stated this.

According to the verdict, the Lagos-based Africa Finance Corporation argued in written evidence to the court that the loans are “systematically important” inside the Nigerian banking system and “represent major credits on the books” of the implicated banks.

AFC, which manages the financial agreement between Aiteo and the bank creditors, however stated that “a default under the loans would be a very serious matter” for the concerned banks.

An injunction secured by the lenders and AFC in late 2020 was granted permanent by a UK court earlier this month, instructing the oil company to stop contesting the debt claim in Nigerian courts and to resolve any disagreements before a London arbitration tribunal.

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