Arik Air’s debt stock increases to N227.6bn in 8 years – AMCON

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*Nwauzor

Ime Akpan

The Asset Management Corporation of Nigeria (AMCON) has said that the task of debt recovery has been arduous and challenging, especially with Arik Air Limited (in receivership), founded by Mr Johnson Arumemi-Ikhide.

The spokesman for the corporation, Mr Jude Nwauzor, who stated this during an interaction with journalists in Lagos on Friday, disclosed that the airline was indebted to AMCON to the tune of N227, 637,469,394.34 billion

He further said Arumemi-Ikhide is also the promoter of Rockson Nigeria Limited, Ojeimai Farms Limited and Ojemai Investment Limited, which debts had all been transferred by various banks to AMCON due to their non-performance.

He said the companies’ total indebtedness of as of December 31, 2024 stood at N455, 171, 764, 772.80 billion.

“Arik owes AMCON N227, 637,469,394.34 billion; Rockson EngineeringN163, 502, 837, 397.75 billion and Ojemai Farms N14, 031, 457, 980.71 billion.

He said the promoter of the firms had not been cooperating, among all the debtors managed by AMCON.

“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,” Nwauzor stated.

He alleged that Arumemi-Ikhide had, instead began a smear campaign to rubbish AMCON.

However, he said: “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.”

Among, several inaccurate claims, Nwauzor said the founder of the airline “has consistently peddled a false narrative regarding his debt to AMCON, claiming that Arik never defaulted in its payment obligations to Union Bank and feigning ignorance of the debt owed to AMCON.

He described the claims as misleading, contending that the loans were non-performing and that Arumemi-Ikhide agreed to restructure the debts but reneged to fulfill the agreed terms?

“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.

“Beyond Union Bank, Arik’s loans were also sold to AMCON by Bank PHB (now Keystone Bank), and Sir Johnson 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. In any event, any challenge of the purchase of the non-performing loans by AMCON is statute-barred and there are provisions within the AMCON Act demonstrating that there is no valid cause of action that may arise from such a challenge.

“In any event, from 2011 to 2017, AMCON engaged in prolonged negotiations with Arik’s management (who never questioned the non-performing loans), but despite several financial accommodations, debt reduction offers, and restructuring efforts, Arik consistently defaulted on its obligations. AMCON was left with no choice but to consider various recovery options,” Nwauzor added.

Pre-receivership, the AMCON spokesman said Arik was plagued by insolvency and operational paralysis.

Nwauzor, who described company’s financial condition “catastrophic” before the corporation’s takeover in 2017, disclosed that 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,” he said.