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The management of
Oceanic Bank International plc has said continuing to disburse funds to
Aero Contractors on their expired credit facility with the bank will
amount to putting depositors’ funds at risk.

The bank’s
management explained that the aviation company had a series of
short-term facilities at an interest rate of between 17 and 19 per cent
per annum with the bank. The facilities expired in September 2009.

According to the
management, a renewal offer from the bank, which substantially
increased the tenor of the facility from between three months and one
year to a 10-year period at a reduced interest rate of 12.5 per cent,
has been on the table for Aero since December 15, 2009. It said the
offer has not been accepted by the board and management of Aero to date.

“Whilst Oceanic
Bank remains committed to supporting Aero, the absence of a valid
contractual loan agreement will put depositors’ funds at risk,” the
bank’s management said.

This follows what
the bank describes as “insensitive statements” in the media by Aero
Contractors including a spate of reports portraying Oceanic Bank as
starving Aero of operational funds.

“Our transaction
with Aero is transparent and indicative of our commitment to supporting
businesses in a manner that provides equity and mutual benefit to the
Bank and its customers.

“We have bent over
backwards to support Aero and have been waiting for an acceptance of
our credit renewal since 15 December, 2009. We are very certain that
the level of positive support given to Aero by Oceanic will be very
difficult to replicate by any bank in this environment.”

“However, it would
appear that Aero just wants access to credit facilities without
provision to pay back. The way forward is for Aero to pay down the
facility or accept the renewal offer.”

Confirming the
mediatory role of the Minister of Aviation, Fidelia Njeze, in ongoing
negotiations, Oceanic Bank’s GMD/CEO, John Aboh, said he was optimistic
of an amicable resolution of the issues at the end of the process.

Meanwhile, Aero’s
account with Oceanic Bank remain operational across its branches
nation-wide as against media reports that their accounts had been
frozen.

Flying on low funds

Aero Contractors,
one of Nigeria’s oldest commercial airlines involved in domestic and
regional transport business, is facing challenges following accumulated
debts of about $200m.

In April, the
airline, which has been in regular negotiations with its banker
(Oceanic Bank Plc) for about six months, disclosed that it has now
reached a point where it is difficult to operate on the terms of
discussions with the financial institution.

The airline had
alleged, in a statement, that the bank, on April 23, froze its accounts
effectively preventing it from paying its suppliers and lessors,
including the Canadian Helicopter Company (CHC).

“The dilemma
centres on the allocation of historical debt. The management teams at
Oceanic Bank and Aero have been in constant dialogue about this matter
for the previous six months. However, they have been unable to agree on
a resolution that will allow Aero to continue trading as a going
concern,” said the carrier in a statement.

The airline is
noted for the introduction of online booking by passengers and recently
introduced an advanced pricing strategy and price optimisation
application called Aviator, which has a capacity of making available 26
different types of fare on every flight for passengers.