Reprieve, As RT Briscoe Gets 57% Debt Waiver Of N4.6bn AMCON Debt
In Talks To Start Assembling Electric Cars
After years of strenuous negotiations, the directors of RT Briscoe Plc say the Asset Management Corporation of Nigeria and creditor banks have granted a significant 57% waiver of its N4.6bn outstanding debt obligation
In a note to its audited account for the full-year ended December 31, 2020, released on Monday, June 28, 2021, the directors said following the negotiations, “AMCON has agreed to a waiver of 57% of the balance.”
There is, however, a proviso that the company pays N2bn over a two-year period in full and final settlement of our liabilities to the corporation.
“Following this agreed waiver by AMCON, the Receiver (Dele Oye Esq) has commenced negotiations with all the other creditor banks of the company for the same percentage waiver of the balances carried by them in their books.”
The board assured that “progress is being made in this wise, and when concluded, this will automatically turn the company’s negative financial position to positive.”
The company’s future, the director further agreed, lies in its ability to reposition “and chart a differentiating course in the very competitive auto industry which currently accounts for about 70% of our business activities.”
Based on this reality, the company is shifting focus on and developing its technical and real estate businesses which it said have shown promising prospects over the years but have had restricted growth due to limited working capital.
As a way out of its debt stranglehold, the company plan to utilize its motor vehicles and generators assembling licenses in Nigeria, following which it is reinforcing its “relationship with BYD, a global leader in electric automobiles, metro transportation and alternative energy with whom we recently executed a new MOU.”
This, among others, the directors stressed, will depend on the success of its proposed N10bn recapitalization that would “give the needed impetus for the exponential growth of our various business activities.”
Trouble, according to the directors, started following the company’s encountered difficulty in meeting its obligations with respect to its import finance/stock replacement finance and overdraft facilities with its bankers. There were also delays in settlement of obligations to suppliers and other service providers, which it admitted, was contrary to the terms of agreement.
All of these, it added, left the group with a loss before tax of N1.1bn for the year ended 31 December 2020, a marginal improvement from previous year’s N1.2bn, which was blamed on the huge N1.69bn finance costs, up from N1.45bn.
Worse still, RT Briscoe continued, was the decline in the company’s revenue over the years which contributed to its inability to generate sufficient cash from its operations to settle maturing obligations. It has also had to write off debt owed to it, in whole or part, after exhausting all practical recovery efforts, satisfied that there is no reasonable expectation of recovery.
At the moment, it noted that current liabilities exceed current assets by N15.8bn, from N14.8bn in 2019. Group total liabilities also exceeded total assets by N10.3bn, from prior year’s N9.5bn.
“As a result of the losses incurred over the years, the shareholders’ fund has been totally eroded to the tune of N10.3bn and N10.5bn deficit as at 31 December 2020 for the group and company respectively.
In its report, the external auditors, PKF Professional Services, drew attention also to RT Briscoe’s bank overdrafts amounting to N17bn as of December 31, 2020, representing 91% of total liabilities, from N15.8bn in 2019.
The company, the auditors said, “has not been able to repay the bank overdraft and this has led to winding-up cases by the banks and other creditors. There are also issues with penalty charges by the banks. The significance of the balance and the inability to repay the borrowings, which led to court litigations and also the going concern issues, make it a key audit matter,” PFK added.