UPDATE 1-Etisalat Nigeria repaid nearly half of loan amount before default

(Adds analysts comment, background)

LAGOS, June 22 (Reuters) - Etisalat Nigeria had already repaid $500 million of $1.2 billion in loans owed to banks before it defaulted in February due to a currency devaluation, a senior executive told Reuters on Thursday.

Talks between Etisalat Nigeria and lenders to restructure the $1.2 billion loan agreed in 2013 have failed to produce a deal, forcing the banks to step in this month.

Ibrahim Dikko, vice president for regulatory affairs, said the company currently owed lenders around $575 million and talks with lenders were ongoing.

The total amount of debt outstanding were $227 million and 113 billion naira ($359 million), he told Reuters in a phone interview.

The loan agreed with 13 local banks in 2013 was a seven-year facility to refinance a $650 million loan and fund expansion of its network. Etisalat Nigeria missed payments in February after sharp falls in the value of the Nigerian naira bloated the loan value, making repayments difficult.

Exotix Capital said in a note Etisalat Nigeria shareholders had refused to give further bailouts to the company to reduce pressure or convert its obligations to equity, and hence the telecom firm had missed its most recent repayment in May.

Parent Etisalat, which is carrying its 45 percent stake in the Nigerian arm at nil value, said on Tuesday it had been ordered to transfer its shares to a loan trustee by June 23, after negotiations failed.

The UAE group, which generates 3.7 percent of its revenue from Nigeria, had questioned the rationale of investing more in the local unit, when asked by lenders to recapitalise its affiliate as an option, sources said.

Exotix said the company had struggled with several years of losses due to low revenue, tough competition and more recently currency losses, adding its second-biggest shareholder Abu Dhabi state investment fund Mubadala has been trying to divest its stake for some time.

One telecom analyst said Etisalat Nigeria could struggle to find new investors, putting lenders in a weak negotiating position, although the company could be viable if acquired by one of its rivals.

Another option could be to restructure the loan, pending any new investors coming along, Exotix said. Etisalat Nigeria has initiated changes to its shareholding structure.

Renaissance Capital analyst said Etisalat could be worth $1.2 billion based on an enterprise value to operating cashflow multiple, compared with South Africa’s MTN and other African peers.

Etisalat Nigeria has 20 million subscribers, according to Nigeria’s telecom regulator, making it the country’s number four mobile operator with a 14 percent market share. MTN has 47 percent, Globacom 20 percent and Airtel - a subsidiary of India’s Bharti Airtel - 19 percent.

$1 = 315.00 naira Editing by Susan Fenton and David Evans