The Chairman, Senate Committee on Power, Senator
Phillip Aduda, has urged the Federal Government to prevent investors from
stripping electricity firms’ assets when the companies are finally sold.
Aduda, gave the advice while commenting on the
progress made in the power sector at a stakeholders’ forum in Lagos. He urged
the regulator of the sector — Nigerian Electricity Regulatory Commission and
other agencies playing supervisory roles — to adequately monitor happenings in
the sector to avoid cases of asset-stripping.
Asset-stripping is the sale of selected assets of
an acquired company generally for the purpose of raising money to pay off some
of the debt incurred in financing the acquisition. It is also the process of
buying an undervalued company with the intent to sell off its assets for a
profit. The individual assets of the company, such as its equipment and
property, may be more valuable than the company as a whole due to such factors
as poor management or poor economic conditions. Asset-stripping could also take
the form of buying a company, and then selling off businesses it owns
separately.
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