Nigerian Eagle Still Seeking Funds

Nigerian Eagle Airlines (formerly Virgin Nigeria Airways) is planning to raise at least $185 million over the next six months. A private placement memorandum has been issued through Nigerian bank UBA Capital. Consultancy Ernst & Young has meanwhile been brought in to seek out potential equity partners. A potential private buyer would want a controlling stake of 51% or more, comprising Virgin Atlantic’s 49% and some of the shares held by Nigerian institutional investors.

Around $50 million would be used to pay back part of a $100 million convertible bond held by UBA. The remainder would be used for capital projects. The airline is looking to convert the order to a lease arrangement, and if unsuccessful may tap rock-bottom prices to grow its Boeing 737-300 fleet.

Full article here.


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6 responses to “Nigerian Eagle Still Seeking Funds”

  1. wingsofnigeria says :

    I hope Emirates makes the bid to buy into NEA. Granted NEA is drowning in debts but with fresh capital injection, expedited E-jet deliveries and good customer service/punctuality, NEA could rise to compete against Arik and even turn profits. If not Emirates maybe Mubadala Holding Company of Abu Dhabi, they got loads of money to invest in Africa.

    • nigerianaviation says :

      The question is whether the current CEO will succeed, before the leased aircraft get grounded. He has been trying to attract new investors since the summer. Is Virgin Atlantic responsible for finding buyers for their stake?
      Arik Air is now becoming a serious threat on NEA’s important West African routes and Arik may soon go eastwards too.

  2. Flugmax says :

    The way I see it, this is a last ditch effort to rescue the airline from financial collapse. If Dapo doesn’t secure fresh capital by early next year, I’m afraid the we can expect aircraft seizures and probably bankrupcy. Yar’adua authorized a discreet rescue credit line to NEA just before he became semi comatose. It is not clear whether the “new” Nigerian govt. would rescue NEA or care about Obasanjo’s legacy projects. In other words, we can expect the new darling to become Arik.

  3. Alaba Bham says :

    Consolidation might be an answer for NEA. Lets explore the scenarios:
    NEA & Aerocontractors- Dapo’s old stomping grounds.NEA has dwindling cash reserves , Aero is a lean airline with revenue strengths through a solid balance sheet.
    NEA & Kabo- Could give Kabo a strong domestic base and platform to really launch its international arm. Not sure what it can give to NEA.
    Maybe this consolidation is necessary for NEA to evolve beyond what can best be described as a nearly constant state of economic and financial turmoil since Virgin jumped ship. However it is natural to ask how consumers are likely to fare under such scenarios.

    • nigerianaviation says :

      Any merger will be very difficult, because of the different ownership structures. The financial situation of Aero is less solid as thought too. It’s doubtful if any Nigerian airline is strong enough to buy out NEA. And what would they gain?
      A new investor that gives NEA a lifeline would be godsend.

      • ezeukpo says :

        In theory a merger would result in enhanced economies of scale. Both airlines are essentially 737 operations. Aero would be interested in IOSA. VK would be interested in access to finance, and Aero is affiliated to Oceanic Bank / Ibru family.
        But in reality, I think Aero would avoid the risk because VK’s debts are excessive. What VK is looking for is a LONG term equity investor, who has has 10-15 years patience to see BIG returns from Nigeria’s self-branded ‘flag carrier’.

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