How Johnson-Ikhide’s plan to reposes Arik crumbled amid N297.3 billion debts to AMCON

  • How once flourishing Nigerian carrier mismanaged fortune
  • Corporation set up four-man resolution team


The struggle by the founder of Arik Air, Sir Arumemi Johnson-Ikhide to reclaim his airline may have hit the rocks.

Arik Air was in 2016 taken over by the Assets Management Corporation of Nigeria (AMCON) over reported N300b debts.

As a first step, John-Ikhide had on May 18, 2022, written a letter to AMCON seeking to recover his airlines taken over from him over huge debts.

Sir Johnson Arumemi-Ikhide

But AMCON in its reply dated June 6, 2022, obtained by Aviation Metric entitled, “Re-Proposal For Resolution of Arik Air In Receivership,” with reference AMC/ABJ/SAE/22/552/DTO/49525 welcomed the renewed interest of the major shareholders of Arik Air Limited (In Receivership) for an amicable resolution of the Arik indebtedness.

The letter jointly signed by Head-Enforcement (Specialised Accounts), Faruk Haliru, and Joshua Ikioda (Group Head-Enforcement) for AMCON stated that in situating the resolution thrust, “We wish to advise that the settlement agreement of ref BA/LAG/C/75/11 (attached) dated August 17, 2011, for N70 billion has expired.”

“Similarly, the BOI loan of N21,388, 792,450.41 granted to the company for 8 years from date May 7, 2013, has also expired. Following the terms of the restructuring facility, all concessions ought to be canceled. Based on this, the indebtedness of Arik Air Limited in Receivership is N297,301,356,316.41.”

The assets managers equally stated that to promote the process of amicable resolution, it graciously retained the balances based on the restructuring terms of August 17, 2011for N70bn and the BOI loan of N21,388,792,450.41 dated May 7, 2013.

The outstanding balance based on this according to the firm was N240, 304, 702, 902.84 as of May 26, 2022, including a post-receivership loan of N1.8 billion.

AMCON reiterated its willingness to pursue the amicable resolution of the Arik debt for the sake of the aviation industry and offers its full cooperation.

It however stated that this could only be sustained with good faith cooperation from the shareholders of Arik.

The Corporation constituted a four-man team led by the Group Head-Enforcement (Joshua Ikioda), the Receiver Manager (Omokide, Kamilu A.), the Account Manager (Faruk Haliru), and the Account Officer (Dorcas Olagoke) to actively negotiate a resolution.

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AMCON maintained that it was willing to table for consideration of its Board and regulatory authorities a settlement with proportionate concessions, stressing that such settlement must be supported by a good faith payment and backed with verifiable proof of funds.

Taking a cursory look into its pre-receivership resolution, the corporation disclosed that it purchased Eligible Bank Assets (Non-Performing Loans) of circa N85 Billion from two Nigerian Banks named Keystone and Union Bank and granted a N15 Billion concession/waiver to arrive at a concessionary sum of N70 Billion. This, it said was restructured for a tenor of nine years at a concessionary interest rate of 12%.

Haliru and Ikioda recalled that following various meetings between AMCON and the main shareholders of Arik and given the unwillingness of the Zenith Bank management to deal directly with the said majority shareholder (Sir Johnson), and taking into consideration the systemic importance of the Arik debt, including the need to exercise the controls required to settle, and “your willingness to settle”, AMCON purchased the Eligible Bank Assets of Arik in Zenith Bank. Unfortunately, as feared by the Zenith team, the settlement failed”.

Reeling out the status of Arik upon commencement of receivership, AMCON said, “Arik did not have adequate cash available for a week’s operations. Out of 30 aircraft on records of the company, only eight aircraft were on the ground and immediately available for operations.”

“The company was heavily indebted to Lufthansa Technic; its long-standing Maintenance Repair Organisation and they had withdrawn their services and left Nigeria. They were replaced with Ethiopian Airlines (MRO). These were also being owed at the commencement of the Receivership.”

Arik Air

“SAMCO Aircraft Maintenance Limited (SAMCO), a Dutch company responsible for maintaining the CRJs and the Q400s was being owed over EURO2.4 million representing nearly six months of obligations.

“Outstanding salaries owed to indigenous and expatriate staff; The work environment was toxic, with many disgruntled staff due to unpaid salaries. Salaries of the expatriate staff and crew were unpaid. Some since July 2016. Some Nigerian Pilots had not been paid since October 2016. In addition, salaries for other local staff had been outstanding since December 2016. Health insurance for the employees had expired and was not renewed. Staff and company pension contributions were unremitted for years.”

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Some other depressing conditions of the carrier were lack of recency training for many pilots necessary to certify pilots for the flight was suspended due to lack of funds, including lack of simulator training as all training schools were alleged to be owed by the carrier as they refused further credits.

“Hotels housing crew and expatriate staff were not paid. In some cases, rents on the apartments of foreign crew/engineers were outstanding. The company was stranded. Arik was canceling flights due to its inability to be fuelled on credit or to pay fuelers upfront as there were outstanding payments owed to aviation fuel suppliers,” AMCON stated.

“The insurance policy for the airplane fleet was due to lapse on Friday, 10 February 2017, and the Company was already owing N418,893,067.97 as arrears of unpaid premium. Lack of maintenance reserves. There was no Arik maintained reserve to overhaul planes. Leases on two A330 planes from subsidiaries of Standard Charter were outstanding for over six months.”

“Mercator, the company with the rights and responsibilities for the management of the Passenger Service System and sale of tickets was owed $2,465,344.63. They subsequently cut the company off from using the platform”.

The duo further disclosed that at the point the receivership was instituted, apart from the fact that the company was on the brink of self-imposed liquidation or shutdown, only N4.5 billion (less than 10% of repayment sums due) had been paid to the corporation after six years.

It stated that at post receivership, based on the representation that the shareholders had a ready investor willing to settle the Arik indebtedness, the Management of AMCON by its offer letter of May 7, 2018, agreed (subject to regulatory approvals) to settle the then indebtedness of Arik Air with the payment of the sum of N65Billion to AMCON in full and final settlement of AMCON’s debt of N135, 246, 593, 749. 01.

In a bid to return the company to its original owner, AMCON proposed Payment of the sum of N26 billion to AMCON with respect to Zenith Bank Plc’s exposure taken over in full and final settlement of all debts owed to Zenith Bank Plc.

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It equally proposed payment of a sum equivalent to sixty-five percent (65%) of the debt owed to Access Bank Plc and EcoBank Plc respectively with then outstanding balances; Access Bank Plc N7,593,192,562.00 as of 20th February 2018 and Ecobank Limited N5,218,406,132.76 as at February 27th, 2018.

It was expected that upon payment of the debts to AMCON and the Banks, the receivership would be terminated and Arik Air Limited returned to its shareholders/owners alongside all documents and securities held by AMCON and the Banks.

The agreement was to be a cash payment within a period of 30 days upon the conclusion of documentation.

AMCON alleged that in response to its repeated request for proof of funds, it was discovered that the original owners introduced SJ Global as a potential investor.

“Unfortunately, their purported letter of funds in Citi Bank Hong Kong turned out to be spurious and fake. Even though AMCON continued to trust and proceeded to issue the offer for settlement, the shareholders of Arik were unable to perform until the offer expired. Subsequent to this, the shareholder of Arik through various emails intimated AMCON about some expected funds from the US.”

Again, following a December 2019 letter, the major shareholders of Arik approached AMCON for a meeting to negotiate a discount on the expired offer to pay N65bn.

The Receiver Manager invited them to a meeting with the Management team of AMCON. No further reply was said to have been received.

Arik Air’s CEO, Capt. Roy Ilegbodu

To them, “We now understand this was due to the ill health of the major shareholder of the company. We are glad to note his recovery and the new opportunity to resolve.”

The Corporation noted that in a recent letter dated May 18th, 2022, Arik made a  proposal to pay N18.2 billion as full and final payment for both AMCON and Zenith Bank exposure – 80% discount on the sum of N91Billion (being the sum total of the N65Billion and the N26Billion in our 11th April 2018 offer).

Wole Shadare