No Result
View All Result
Saturday, April 1, 2023
Citi Business News
  • Home
  • News
    • All
    • Agriculture
    • Economy
    • General
    • Government
    • Local Economy
    • Top Stories

    BoG cautions against use of Ghana Cedi for bouquets and hampers

    CUTS International pushes for passage of Competition bill

    DBG partners UGBS to deepen development finance

    GH¢5.5bn approved by Parliament not only for Blackshield customers – SEC

    BoG assures of enhanced educational campaigns to ensure proper handling of local currency

    Youth in Accountable Governance calls for passage of outstanding revenue bills

    GRA reiterates calls for businesses to embrace  E-VAT

    IES predicts drop in fuel prices from April 1

    Journalists trained on the Enrolment of cocoa farmers in pension scheme

  • Business
    • All
    • Agribusiness
    • Banking And Finance
    • Manufacturing
    • Markets
    • Mining
    • Oil And Gas
    • Real Estate
    • Tourism
    • Transport

    CUTS International pushes for passage of Competition bill

    DBG partners UGBS to deepen development finance

    Bank of Ghana increases Monetary Policy rate to 29.5%

    Industry experts convene to discuss diversification strategies for pension funds

    It’s time to give women top posts in multilateral institutions – GCBL Chairman 

    Global Chamber of business leaders enters into partnership with IEFS

    Gold for Oil policy will save Ghana $4.8bn annually – Veep

    Energy Minister scheduled to speak on Ghana’s near-term opportunities at NAEPEC 2023

    Standard Chartered appoints Ebenezer Twum Asante as Chairman of Board of Directors

  • TECHNOLOGY

    Cyber Security Authority commences licensing and accreditation regime

    Twitter is reportedly planning to charge businesses $1,000 per month to keep gold verified checks

    Ghana withdraws $672m back-tax demand from MTN Group

    MTN to fight $773m tax bill from government

    Telcos to implement 1% E-Levy charge from today

    Huawei Equips 500 Traders in FinTech

    Africans urged to bolster adoption of Bitcoins

    What does 2023 hold? Predictions in payments for the year ahead for Africa

    Meta considered building a Twitter competitor to capitalize on Elon Musk’s ‘crisis’ at company

  • INTERNATIONAL
    • All
    • Africa
    • Asia
    • Europe
    • Middle East
    • US

    Ghana and South Africa urged to leverage on AfCFTA to boost bi – lateral relations

    Silicon Valley Bank crisis: What led to stock crash, what lies ahead?

    Medical devices market projected to expand by $ 7.1 billion by close of year

    African Union adopts Africa Prosperity Dialogues AfCFTA action plan

    Third World Network Africa urges Africans to be strategic about AfCFTA

    5 important things to know about the African Continental Free Trade Area agreement

    $130bn and $170bn needed annually to bridge Africa’s infrastructural gap – Bawumia

    Feed Africa Summit: African Development Bank to commit $10bn to make continent breadbasket of the world

    Nigeria’s national debt hits an all time as the country struggles with repayment

  • FEATURES
  • Videos
Citi Business News
  • Home
  • News
    • All
    • Agriculture
    • Economy
    • General
    • Government
    • Local Economy
    • Top Stories

    BoG cautions against use of Ghana Cedi for bouquets and hampers

    CUTS International pushes for passage of Competition bill

    DBG partners UGBS to deepen development finance

    GH¢5.5bn approved by Parliament not only for Blackshield customers – SEC

    BoG assures of enhanced educational campaigns to ensure proper handling of local currency

    Youth in Accountable Governance calls for passage of outstanding revenue bills

    GRA reiterates calls for businesses to embrace  E-VAT

    IES predicts drop in fuel prices from April 1

    Journalists trained on the Enrolment of cocoa farmers in pension scheme

  • Business
    • All
    • Agribusiness
    • Banking And Finance
    • Manufacturing
    • Markets
    • Mining
    • Oil And Gas
    • Real Estate
    • Tourism
    • Transport

    CUTS International pushes for passage of Competition bill

    DBG partners UGBS to deepen development finance

    Bank of Ghana increases Monetary Policy rate to 29.5%

    Industry experts convene to discuss diversification strategies for pension funds

    It’s time to give women top posts in multilateral institutions – GCBL Chairman 

    Global Chamber of business leaders enters into partnership with IEFS

    Gold for Oil policy will save Ghana $4.8bn annually – Veep

    Energy Minister scheduled to speak on Ghana’s near-term opportunities at NAEPEC 2023

    Standard Chartered appoints Ebenezer Twum Asante as Chairman of Board of Directors

  • TECHNOLOGY

    Cyber Security Authority commences licensing and accreditation regime

    Twitter is reportedly planning to charge businesses $1,000 per month to keep gold verified checks

    Ghana withdraws $672m back-tax demand from MTN Group

    MTN to fight $773m tax bill from government

    Telcos to implement 1% E-Levy charge from today

    Huawei Equips 500 Traders in FinTech

    Africans urged to bolster adoption of Bitcoins

    What does 2023 hold? Predictions in payments for the year ahead for Africa

    Meta considered building a Twitter competitor to capitalize on Elon Musk’s ‘crisis’ at company

  • INTERNATIONAL
    • All
    • Africa
    • Asia
    • Europe
    • Middle East
    • US

    Ghana and South Africa urged to leverage on AfCFTA to boost bi – lateral relations

    Silicon Valley Bank crisis: What led to stock crash, what lies ahead?

    Medical devices market projected to expand by $ 7.1 billion by close of year

    African Union adopts Africa Prosperity Dialogues AfCFTA action plan

    Third World Network Africa urges Africans to be strategic about AfCFTA

    5 important things to know about the African Continental Free Trade Area agreement

    $130bn and $170bn needed annually to bridge Africa’s infrastructural gap – Bawumia

    Feed Africa Summit: African Development Bank to commit $10bn to make continent breadbasket of the world

    Nigeria’s national debt hits an all time as the country struggles with repayment

  • FEATURES
  • Videos
No Result
View All Result
Citi Business News
No Result
View All Result

Angola: Sonangol’s Debt Woes

bycitibusinessnews
July 8, 2016
in Southern Africa
Share on FacebookShare on TwitterShare on Whatsapp

Angola’s state oil giant, Sonangol, is running out of time to prove it has a credible plan to repay US $13 billion in loans it obtained from a syndicate of European banks.

The loans’ agreements came with a contractual obligation to produce annual balance sheets showing a healthy ratio of debt to capital and it appears Sonangol has been unable to honour this.

Last month the London-based Standard Chartered Bank set a 45 day deadline for Sonangol to explain its failure to comply with the debt ratio obligation stipulated as part of the loan agreement, and to provide documentary evidence that is has the capacity to honour the terms of the loan.

ADVERTISEMENT

Sources close to the Board of Directors of Sonangol have indicated to Maka Angola that the company may not be in a position to make the repayments on time.

It is alleged that Sonangol’s long-term auditor EY raised objections to some creative accounting which the Angolan company hoped would diminish the scale of its financial problems, improve the debt ratio and satisfy its syndicate of creditor banks.

One aspect of the plan was to transfer US $5 billion of Sonangol’s debt off the books overnight, on the grounds that this was a sum disbursed towards the National Housing Project and is therefore a debt “owned” by the state. This expediency would reduce by almost half the amount of debt being carried by Sonangol.

In addition, the new Sonangol board wants to change the way it reports its revenue.

Corporate income statements listing revenues and expenses for the accounting period typically show more than one measure of pre-tax profits, e.g. EBIT (Earnings before interest and taxes) and EBT (Earnings before taxes). The primary difference between the two is that EBT factors interest into its calculation, while EBIT does not, and as a result this provides a slightly different perspective on the financial health of the company, depending on how much interest is owed on any loans taken out by the company.

Since 2013, Sonangol’s annual balance sheet has only shown a credit because of successive re-valuations of its assets rather than cash flow, valuations which the auditors were unable to justify.

Thus, after 11 years, EY has been replaced by another of the ‘Big Four’ auditors, KPMG. The man in charge of KPMG Angola is none other than Sikander Sattar, who has been in charge of KPMG Portugal, where he came under fire for the part he played (or failed to play) in the contentious collapses of the Banco Espírito Santo (BES) in Portugal and its Angolan subsidiary (BESA).

KPMG was the official auditor of both BES and BESA. It was blamed for failing to avert BES’s over-exposure to risk when BESA offered unsecured loans worth more than three billion euros. Some analysts suggest that as a result, international financial markets have lost confidence in KPMG.

Added to this there are scant reasons for optimism about the short-term financial health of Sonangol. Last year, the former chairman of the board of Sonangol, Francisco Lemos, went public with a claim that the national oil company was effectively bankrupt.

Despite subsequent official denials, time has shown that Francisco Lemos wasn’t far wrong. Given the iconic status of Sonangol as Angola’s primary source of foreign revenue, it took courage to turn whistleblower and alert the public to Sonangol’s impending implosion.

Evidence of this came in the stunning announcement made recently by President José Eduardo dos Santos that Sonangol had been unable to make any contribution to the State Budget since last January.

His response to the impending disaster has proved a source of further anxiety to the international financiers who have lent so much to Sonangol. Contrary to law and common sense, he appointed his daughter, Isabel, to take over as chair of the Board. Isabel lost no time in assigning to herself direct responsibility for the key portfolio of financing (Sonangol Finance).

That places Isabel dos Santos squarely in charge of the Money. Additionally, there is a clear conflict of interest given Isabel dos Santos is both a shareholder and debtor of thanks to her business interests in UNITEL and GALP, in a joint-ventura with Sonangol.

No wonder then that Sonangol’s creditors say they have reached breaking point. Representatives of both European and North American financial institutions have told Maka Angola that they are now starting to distance themselves from any business with Sonangol, because they fear that it will breach international laws.

Their concerns are two fold: having a politically-exposed person in charge of Sonangol; and, that this person simultaneously controls other companies (e.g. UNITEL) whose shareholders are owed dividends (Portugal Telecom), formally approved by their Annual General Meetings, but still unpaid due to internal disputes.

Add this to the continued slump in oil prices and growing evidence about Sonangol’s poor state of financial health, and international financial experts say there are now grave concerns about Isabel’s ability and willingness to meet the company’s international contractual obligations. The future for both Sonangol – and Angola – is looking rather bleak.

–

Credit: All Africa

Related Posts

Business

AngloGold Ashanti exits SA, sells mines for US$297 million

bycitibusinessnews

AngloGold Ashanti is selling its Mponeng mine and Mine Waste Solutions tailings recycling business to Harmony Gold for $300m (about...

Read more

MTN reveals revenue growth despite drop in subscribers

glasses of red wine raised in a toast

[Article] Winning Women of Wine

Zimbabwe electricity price shoots up by 320 percent

Selling added value: The case of Wines of South Africa

South Africans urged to withdraw ‘enough cash’ ahead of banking strike

UK’s Richelle Van Gemert wins Wines of South Africa Sommelier Cup 2019

Next Post

Nigeria:Shell lifts force majeure on Bonny Light exports

Video on Demand: Business Weekly

ADVERTISEMENT
Citi Business News

© 2019 Citi Business News - CitiBusinessNews.com by CNR Digital.

Navigate Site

  • Home
  • News
  • Business
  • TECHNOLOGY
  • INTERNATIONAL
  • FEATURES
  • Videos

Follow Us

No Result
View All Result
  • Home
  • News
  • Business
  • TECHNOLOGY
  • INTERNATIONAL
  • FEATURES
  • Videos

© 2019 Citi Business News - CitiBusinessNews.com by CNR Digital.