Latest news with #financial woes
Zawya
5 days ago
- Business
- Zawya
Nigeria: Mounting deficits raise concerns over bank takeover as Ikeja Electric reports $16mln pretax loss
Efforts by Nigerian banks to take over Sahara Group's power assets may be complicated by the deepening financial woes of Ikeja Electricity Distribution Company (Ikeja DisCo), which posted a pretax loss of N25.2 billion for the full year ended December 31, 2023. The company's latest financials revealed worsening fundamentals that raised red flags for potential acquirers. Despite recording a 21.6 percent increase in revenue to N207.34 billion—up from N170.4 billion in 2022—soaring costs and operating inefficiencies continued to erode profitability. Distribution and administrative expenses jumped 25.7 percent to N55.7 billion, while net finance costs surged by 70 percent to N10.34 billion in 2023. A tax credit of N21 billion helped cushion the blow, reducing after-tax loss to N4.1 billion from a previous profit of N33.96 billion in 2022. Nonetheless, accumulated deficits rose to a record N177.05 billion from N172.88 billion a year earlier, highlighting the company's persistent losses. Among the most pressing concerns is a tariff shortfall of N83.64 billion and trade payables totaling N115 billion. The company's current liabilities of N183.46 billion far exceed its cash and bank balance of N23.01 billion, resulting in a negative working capital of over N160 billion. Employee benefit expenses stood at N12.47 billion, while staff welfare and contract labor costs added N121.89 million and N1.64 billion, respectively—bringing total personnel-related spending to N14.52 billion. Repairs and maintenance expenses were N2.4 billion. Ikeja DisCo's biggest expense remains energy purchases, with the company spending N215.31 billion on electricity sourced from the Nigerian Bulk Electricity Trading (NBET) Plc. This accounts for the lion's share of the company's rising cost of sales. Total loans and borrowings stood at N39.2 billion, while total financial liabilities—including trade and other payables (excluding statutory deductions)—amounted to N173.94 billion. Analysts say the company's prolonged losses and weak balance sheet make it a less attractive asset for lenders aiming to recover outstanding debts. Ikeja DisCo is a beneficiary of the Central Bank of Nigeria's (CBN) Operating Expenditures (OPEX) loan, a special facility designed to support power distribution companies in meeting their minimum market remittance obligations and operational expenses. The 10-year loan was extended at a subsidised interest rate of five percent annually up to February 28, 2023, and nine percent thereafter. In addition, the company secured a N2.9 billion loan from Sahara Power Group Limited on May 1, 2022. This 12-month facility, offered at an 18 percent interest rate, was used to finance technical upgrades. By the end of 2023, the full amount had been drawn, up from N2.4 billion in 2022. Another loan agreement worth N3 billion was executed in April 2023, also at 18 per cent interest over 24 months, with N1.6 billion disbursed by year-end. Ikeja DisCo's troubling financial position comes amid an ongoing legal battle between Sahara Group and a consortium of Nigerian banks seeking to recover loans said to total N1.1 trillion. The banks involved include Access Bank, First Bank, Zenith Bank, UBA, Union Bank, FCMB, Fidelity Bank, Keystone Bank, and Sterling Bank. Through their appointed trustee, First Trustees Limited, and facility agent, FBNQuest Merchant Bank, the banks appointed Kunle Ogunba (SAN) as receiver over Sahara's assets on July 19, 2025. In response, Sahara Group swiftly filed lawsuits to halt the receivership process. On August 5, 2025, the Federal High Court in Lagos, presided over by Justice Akintayo Aluko, issued an injunction restraining the banks and the appointed receiver from taking adverse actions against the power companies. The ruling protects Egbin Power Plc, Ikeja Electric Plc, and First Independent Power Limited (FIPL) from enforcement actions related to the disputed debt. Babatunde Osadare, Chief Legal and Regulatory Officer of Ikeja Electric, said the ruling bars the receiver from accelerating the loan, interfering in business operations, enforcing share security, or acting unilaterally on financial documents. Ikeja Electric Plc operates within a franchise covering six business units: Ikeja, Oshodi, Shomolu, Ikorodu, Akowonjo, and Abule-Egba. The company acquired these assets in 2013 during the federal government's power sector privatization program. The assets were sold to the New Electricity Distribution Company (NEDC) consortium—comprising Sahara Group and Korean Electric Power Corporation (KEPCO), which serves as the technical partner. Ownership was formally transferred on November 1, 2013. Kepco Energy Resources Limited holds a 70 percent stake in Egbin Power Plc; NG Power HPS Limited, a Sahara subsidiary, owns 70 percent of First Independent Power Limited while New Electricity Distribution Company Limited controls 70 percent of Ikeja Electric. Analysts believe that with mounting liabilities, ballooning deficits, and a court-ordered injunction freezing lender actions, the future of Sahara Group's energy holdings—including IkejaDisCo—remains mired in uncertainty. For banks, the combination of weak financial performance and legal obstacles poses significant challenges in their pursuit of loan recovery. Copyright © 2022 Nigerian Tribune Provided by SyndiGate Media Inc. (
Yahoo
23-07-2025
- Automotive
- Yahoo
Tampa woman turns to Ramsey Show hosts after her brother refused to repay a car loan she took out to help him
Four years ago, Carmen from Tampa, FL, did her brother a solid by letting him move into her home when he was low on cash. She didn't charge him rent and she even took out a car loan for him — in her name. Fast forward to now, and their fortunes are reversed. Carmen needs the money, but her brother doesn't want to repay the car loan. During an episode of The Ramsey Show, Carmen said her brother has 'fully recovered' from his financial woes. He works on commission, has stocks, CDs and retirement savings, and 'is living a good life,' she said. Yet, when it comes to the car loan, he told his sister he wasn't going to 'take that upon my credit.' As Carmen pondered whether she should pay off the remaining loan herself — which is around $11,000 — co-host Ken Coleman told her: 'You know what you're supposed to do.' Don't miss Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 6 of the easiest ways you can catch up (and fast) Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan 'works every single time' to kill debt, get rich in America — and that 'anyone' can do it What happened? Carmen's husband made a career switch that she says will eventually pay off, but in the meantime, they're bringing in less money. And to get a mortgage, they were told by their lender that they need to get rid of the car loan debt first. Carmen didn't just co-sign the loan; she put it under her name. So her brother is making monthly payments to Carmen on a car that's not in his name and that 'he's never going to own,' said co-host Jade Warshaw. If he's not willing to pay back the full amount of the loan, then Carmen has every right to repossess the vehicle. 'That is not mean, Carmen. That is not a bad sister,' said Warshaw. 'That is just you doing something that is very normal and fair by saying, 'if I'm paying for a car that's in my name, I'm going to be the one owning it and driving it.'' If her brother wants to keep making monthly payments, 'then he needs to go rent a car,' said Warshaw. Carmen said a private seller would pay $19,000 for the vehicle. 'I would go get that car from your brother today and sell it instantaneously,' said Coleman. At that point, her brother can decide whether he wants to buy the car from her, in which case he can pay back his sister for the full amount of the loan and she can transfer the title over to him. If he's not interested in buying it, she can find another buyer and pay back the loan from the proceeds. Still, Carmen is hesitant because she doesn't want to cause a rift in the family. 'It already has,' said Warshaw. 'The damage you're worried about being done has already been done.' Warshaw said she wants Carmen to be respected. 'It's a disrespectful transaction and if you let it continue, he's not just disrespecting you — you're disrespecting yourself at that point.' Read more: Americans are 'revenge saving' to survive — but millions only get a measly 1% on their savings. Should you loan a family member money? While you may want to help out a family member in need, a 'friends and family' loan should still be treated as any other loan. Otherwise, you could consider the money a gift (particularly if you don't think you'll ever see that money again). About one-third of U.S. adults have provided financial support to friends or family, according to the Consumer Financial Protection Bureau (CFPB). It could make sense in some circumstances — for example, parents may loan their adult child some money when they're just starting out in their career or don't yet have a credit history to qualify for a loan. Whatever the case, if you're thinking about lending money to a friend or family member, first consider your own financial situation — for example, it's probably not a good idea to drain your own emergency fund to pay for a family member's emergency. And, if you do have some extra cash, how much of it can you afford to part with and for how long? If you do lend money to a friend or family member, put it in writing (you can find several options for templates online by searching under loan agreements). This contract should outline the terms of the loan, such as when you expect it to be repaid (either in a lump sum or a series of payments over a specified period of time). You should also specify whether you'll be charging interest on the loan (perhaps the rate you'd be getting if that money was sitting in your high-interest savings account) and what the consequences will be if they can't pay you back. For example, in Carmen's case, if she had made her brother sign a contract before getting a car loan, she could have specified that she'd take back possession of the vehicle if he didn't pay back the loan in full by a certain period of time. Another option is co-signing a loan, but only do so if you trust this person — not because you're feeling pressured by your family to do so. A co-signer is a person 'who agrees to be legally responsible for someone else's debt,' according to Equifax, one of the three major credit reporting agencies in the U.S., along with Experian and TransUnion. This provides a safety net to lenders, but it also means the co-signer is legally responsible for that debt if the borrower is unable to pay it back. Plus, if you're the co-signer, that debt will show up on your credit report and could influence your credit score and/or debt-to-income ratio. If the borrower fails to make payments, that will harm your credit rating — and it will likely put a strain on your relationship. If you're already in that situation, like Carmen, there's no easy way out. 'We didn't say this was going to be fun but… it's already not fun,' said Coleman, 'so let's go ahead and rip the band-aid off and take possession of the car.' What to read next Robert Kiyosaki warns of 'massive unemployment' in the US due to the 'biggest change' in history — and says this 1 group of 'smart' Americans will get hit extra hard. Are you one of them? How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you'll need a substantial stash of savings in retirement Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. This article provides information only and should not be construed as advice. It is provided without warranty of any kind. Sign in to access your portfolio
