Financial expert and Managing Partner of Segun Sulaiman & Co., Faruk Yusuf, has clarified that the amount currently in default under the Geregu power plant’s N40.9 billion bond is about N6.03 billion, not the full value of the bond.
Yusuf made the clarification during an interview with ARISE NEWS on Friday while explaining the circumstances surrounding the bond default and the change in ownership of the power plant.
He said the N40.9 billion represents the original value of the bond issued in July 2022, stressing that repayments of both principal and interest had been made since then.
“I am here this morning to provide an insight on the lingering issues on the social media space regarding the N40.9 billion bonds that has to do with the power plant. Yes, there is a change of ownership late December 2025, and we don’t want at the moment now to say that that actually caused the default when the liability became due by 28 July 2026.
“But before I go into enlightening us on what happened and what ought to have been done and what was not done, I need to provide clarifications to Nigerians and the entire world that we have been hearing ‘N40.9 billion default, N40.9 billion default’.
“Yes, N40.9 billion is the entire bond value, but that is not the exact amount that is in default. This bond was taken in July 2022, and there have been repayments ever since on both the principal and the coupon. Coupon here, for those of us who are not accountants or auditors, is the interest rate.”
Yusuf said the interest had been paid seven times, while principal repayments had been made three times, with an initial four-year period serving as a moratorium.
“The interest rate has been paid for seven times. The principal has been paid for three times. The four in ab initio were the moratorium period, where they were given the leverage to go into businesses better first before they can pay.”
He said the next liability became due on 28 July 2026, following the change of ownership in December 2025.
“Payment had been ongoing. Ownership changed in December last year. The next liability became due July 28, to be specific, 2026, and that is what is the bone of contention at the moment.”
Yusuf put the amount that fell due on 28 July at N6,026,093,363.01.
“So what was defaulted as of 28 July was not N40.9 billion. It is N6 billion, N26 million, N93 thousand, N363 naira, one kobo. In order not to subsequently, in all the other fractions, it is N6 billion that is in default as of 28 July 2026, a few weeks back.”
On the cause of the default, Yusuf said the bond had originally been raised to finance the acquisition of another power plant, rather than to provide working capital for Geregu.
“Now we’ll have to look at why the default in the first place. Yes, when ownership changes, there would have been a lot of due processes. There would have been a lot of exchange of documents, and there would have been assets to take over, liabilities to take over.
“But part of the liabilities to take over is the bond payable, and as of December last year, the bond payable is N34 billion, which is part of what is N6 billion that has fallen due. And this bond continues; the maturity is 28 July 2029.
“In all business arrangements, there is an asset for this; in a country, that’s what we call in and out, debit and credit. For every corresponding debit entry, there always has to be a corresponding credit entry.
“For that bond payable, what is the company’s plan for repayment as and when they fall due? That will take us back to when the bond was taken in 2022.
“The bond was taken in 2022 for the acquisition of another power plant, not Geregu, because when you want to raise bonds, when you want to raise funds through bonds, there must be a project to be used for.
“That bond was not taken as working capital. It was not taken to enhance the Geregu power plant’s working capital in 2022. It was taken to acquire another power plant, and that failed.”
According to Yusuf, the acquisition did not proceed because the company could not meet the requirements of the Bureau of Public Enterprises (BPE).
“They couldn’t meet up with the BPE requirement, the Bureau of Public Enterprises, so they were unable to buy. And there had already been an enmity between them and the bondholders.
“So what the Geregu power plant ought to do was either redirect the bond value to strengthen the business or put it in an escrow account.
“Escrow account here means an interest-yielding account. And from the books available to those of us who, because of the noise on the social media space, went behind to carry out our own investigations — this is a critical sector that those of us who are auditors and accountants, consultants and financial consultants are interested in — we went behind and carried out a review of their books and discovered that, yes, that money was kept in an escrow account, which is right, generating interest.
“Since their business was unable to go on, that is, the acquisition of that power plant that the bond was taken for couldn’t happen, the next thing the old management did was to put that money in an escrow account.”
Yusuf said a review of the company’s books showed that the bond payable stood at about N34 billion, while restricted cash was about N31 billion.
“And when we look at their books, we discover that, yes, the bond payable is N34 billion, the restricted cash there is N31 billion. This N31 billion, since it’s an interest-yielding account, is where you will now go and liquidate the part when the liability of this N34 billion is due.
“Now N6 billion has fallen due as of 28 July.”
He said the new management subsequently discovered that the funds in the restricted account were no longer available.
“And the new management, as it were, had to go to where the cover was, the backup cover was, which is the restricted account, which is where the escrow account, where this money was kept.
“And unfortunately, they were told that that money had been utilised. Utilised by who? Yes, by the former owners that handed over to them.
“As auditors, you know, we will have to carry out some inquisitive rules. Were you not aware that this was utilised at the point of handing over?”
Yusuf said the due diligence process during an acquisition could not guarantee that every issue would immediately be uncovered.
“A valuable review showed that there can never be 100 per cent due diligence when there is a merger or acquisition. It is when you are taking over that certainties will begin to reveal themselves.
“Part of the asset handed over to the new owners, where correspondence were exchanged, documents where correspondence were exchanged, was that this N31 billion that was in an escrow account was confirmed to us to exist. And it was confirmed that it was there. And it is from there that liquidations were to take place to take care of liabilities when they fell due.
“When the first liability fell due as of July 2026, to be specific, they went back to the restricted cash. And as I said earlier, unfortunately, it had been utilised. They had no assets to fall back on again because the money was not there.”
He said questions were subsequently raised about how the new owners had been unaware that the funds had been utilised.
“One or two questions from my team to them was, what now happened? Why did you not know that these funds were utilised? That was when we were told, and we were shown some documents, some correspondence between the company’s lawyer and the old owners that they were confirmations that that money was intact.
“But as it were, the money had been utilised and it’s not available for them. And that was where all hope lies for intentions as when the liability fell due.
“Now the new owner, now that this has happened, they have to go into another avenue of sourcing for funds to be able to meet up with their obligations as they fall due, to be able to assure and restore confidence of the bondholders.”
Addressing concerns over corporate governance and possible regulatory intervention, Yusuf said regulators were already aware of the matter and that processes were ongoing.
“When the issues of the funds which were supposed to be used to make payments — yes, actually, when bonds are taken, the bonds are supposed to be used for the specific purpose for which they were taken.
“But the specific purpose failed because they were unable to acquire the assets. And when they were unable to acquire the assets, they kept the money in an escrow account. The money ought to have been there.
“That is where they were making payments when they fell due. But as it is now, when the new owners discovered that this was what had happened, I don’t want to go too detailed because, as it is at the moment, the regulators are already aware, the regulatory process is already ongoing.
“And that is why the government and the new owners have not been able to come up with full details of what is behind the scenes.”
Yusuf also rejected suggestions that he was appearing on behalf of Geregu, insisting that his role was to provide clarification on the amount in default and the circumstances surrounding it.
“That is your opinion. I wouldn’t want to go into that.”
He added:
“I am only here to provide insight into what the legal issues are. N40.9 billion is what the bond value is. I am here to provide information that it is not N40.9 billion that is in default, but it is N6 billion that is in default.
“And while I went into detail, because the question was asked why was there a default, I have to provide the information on why there was a default based on my own findings.”
Responding to questions on why the matter was not made public earlier if the funds were discovered to be missing, Yusuf said the regulators had already been informed.
“I said earlier, during my preamble, and I said, the regulators have been informed. The processes are already ongoing within the companies and the regulators. The shouting doesn’t mean they need to come out to the public.
“It has been shouted. That is why the regulators are aware that this is what happened. This is the bond that was taken.
“It was not utilised for the purposes. It was kept in an escrow account. The money is no longer in the escrow account.”
Yusuf maintained that his appearance was primarily intended to correct what he described as a misconception about the amount that had fallen due.
“No, the issue here is this. I said the company couldn’t come out with public details because the regulators are already involved in processes as it were. And since the process is ongoing, you don’t expect anybody to begin to come to the public and begin to shout.
“I am here this morning not to say anything. I am here this morning to be able to clarify and enlighten us.
“Yes, you said that you are not daft, you are not dumb, you are aware that it is N40.9 billion, but even when this programme was to start this morning, the same N40.9 billion was mentioned. What was due was not mentioned.
“And the entire Nigerians, as we keep hearing this, it is that N40.9 billion that we are taking to everywhere. Nobody is looking at what is due. What is due is this billion.”
He said the actual amount due was higher than earlier estimates of between N3 billion and N4 billion.
“If you had gotten clarification before that, whatever that is due is around maybe three or four or this billion. The correct figure is six point something billion, as I said earlier, that has fallen due based on my own investigation.
“And sorry, please, you are a journalist, you can carry out investigative journalism to be able to get some of these findings that I have been able to get behind this myself.
“I was not provided anything here by Geregu. I was not sent here by Geregu. I was here to provide insight and clarification that it is not N40.9 billion, but it is N6 billion. And these are the reasons why it has fallen due and it has not been paid.
“But all concerted efforts are ongoing to be able to reassure the bondholders of their positions.”
Boluwatife Enome
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