• Oil firm to sue for $1 billion damages over bank’s alleged breach of contract

• More shareholders oppose bank’s private placement

More facts have emerged concerning the alleged failure of the First Bank of Nigeria (FBN) to fulfil its part of a deal to fund the exploration and development of Oil Mining Lease (OML) 120, contrary to the agreement it had with the management of General Hydrocarbons Limited (GHL).

Also, the Chairman of First Bank Holdings may face arrest for alleged contempt of a Federal High Court, Lagos Judicial Division and flouting of an order restraining the bank from taking any steps to enforce any security, receivables, instruments or finance documents or assets of GHL.

The court had ruled that “An order is granted, restraining the Respondent either by itself or acting through its servants, agents assigns, privies affiliates howsoever described, including any person claiming under its authority from making any calls or demands or taking any steps whatsoever to enforce any security receivables, instrument, finance documents or assets of the Applicant which have been charged as security for the facility agreements in respect of the Applicant’s operation of OML 120.

“(This) include, but not limited to the said letter, and the amended and restatement agreements between the Applicant and the Respondent pending the hearing and determination of the arbitration proceedings between the Applicant and the Respondent brought pursuant to Clause 12 (c) of the Agreement between the Applicant and the Respondent dated 29th May, 2021.”

But it was gathered that FBN allegedly went ahead by obtaining a court order purportedly freezing GHL’s funds in all commercial banks in the country to the tune of $225.8 million, in violation of the earlier court order. As a result, GHL has initiated contempt proceedings against the bank and its directors.

Aside Otedola, who is said to be facing arrest for going ahead to get a mareva order without allegedly disclosing a subsisting order to the court, also facing contempt charges are the Managing Director/Chief Executive Officer, Mr. Olusegun Alebiosu, and other directors.

GHL had dragged FBN Holdings to court as the holding company was seeking to frustrate and take over the oil and gas company’s bona fide assets after signing the memorandum of understanding (MOU).

GHL wrote: “More importantly, FBN is putting at risk the repayment of the outstanding exposure to AMCON and the repayment of its new facilities under the MOU and seeking to create Atlantic Energy 2 by trying to orchestrate another non-performing loan situation.

“GHL will resist this with all the powers of the law and will not allow any non-performing loan in its name as we remain committed to meeting all our obligations. In addition, FBN’s non-payment for the TotalEnergies farm-out of the Noble Rig (drill ship), has exposed GHL to over $15M default penalty by 14 November 2024 which FBN is fully aware of.

“These costs are in addition to further millions of dollars in costs and exposures to global service providers like Schlumberger, Baker Hughes, Century FPSO and Marine Platforms, Halliburton, etc. For over three years, despite demands from GHL and in line with all the signed agreements, FBN has refused, failed and neglected to pay salaries and operating expenses of GHL staff, offices and operations.

“If they cannot pay for GHL personnel and operations, how do they plan to pay for an additional independent asset manager, when GHL has already appointed ab initio Schlumberger and Baker Hughes as joint technical operators and advisers?”

It was reported that a group of shareholders at First Bank of Nigeria Holdings Plc. with 10 per cent of the company’s shares had formerly requested the company to call an Extra-ordinary General Meeting (EGM) under section 215 (1) of CAMA in which case they have 21 days to call the EGM.

Top on the agenda of the proposed meeting is the removal of Otedola and a Non-executive/Deputy Chief Executive of Geregu Power Plc, Omodayo-Owotuga.

The shareholders alleged that since Otedola’s acquisition of a significant amount of shares that led to his emergence as Chairman of FBN Holdings, the financial institution has not known peace.

Besides, it was alleged that First Bank routinely breached the letters of the GHL contract, causing severe losses to the oil company, including over $47 million and 217-man days due to delayed funding of the project or outright refusal to finance the deal.

Specifically, GHL management said the agreement which entailed the bank funding the optimal exploration and development of the oil asset, made the bank escape a loan loss provision of N302 billion against a profit of N151 billion ultimately declared for the year ending December 31, 2021.

“Having saved them this massive hit, FBN’s books now became performing, avoiding a market punishment and loss of confidence that would have followed their loss which they may never have recovered from as a result of their own reckless lending.

“At GHL, we are wondering if FBN used us to get to profitability under false pretences knowing that they had no intention of meeting their financial obligations to GHL of fully funding the optimum exploration, development and production of OML 120 as events would later show,” part of the document read.

Due to FBN’s very tardy manner in disbursing the payments, the bank, GHL said, did not make available the $25 million out of the agreed $50 million for drilling until three to four months later, in January/February 2024, causing more losses to GHL’s drilling operations.

The situation, the oil firm said, led to a liability for over $500,000 per day for the Blackford Dolphin rig which was on standby mode (not operating) during the period of non-payment.

Besides, GHL has vowed to sue the bank for $1 billion in damages, following the alleged breach of the contract entered by both parties.

These developments came, as more shareholders of the First Bank, including Barbican Capital Limited and Norsworthy Investment Limited have kicked against private placement by the bank and are seeking the holding of an Extraordinary General meeting (EGM) of the Company to be held as soon as possible.

In a letter to the bank, Barbican wrote: “We hereby requisition for an Extraordinary General meeting (“EGM”) of the Company to be held as soon as possible (i.e. in any event not later than the statutory 21 days from the date of the Company receiving this requisition)

“…That the capital raise in the aggregate sum of N350,000,000,000.00 or any part thereof being undertaken by the Company be and is hereby authorised to be implemented by the issuance of shares by way of a rights issue only.”

It added: “That Mr. Olufemi Otedola, and Mr. Julius B. OmodayoOwotuga be removed as Directors of the Company and That Mr. Obafemi Adedamola Otudeko and Mr. Saheed Olatunbosun Alao be appointed as Directors of the Company, subject to the approval of the Central Bank of Nigeria (CBN), replacing the removed directors.“

On its part, Norsworthy noted: “We write to express our strong interest in the capital raising exercise via Private Placement which gives us cause for grave concern. Our understanding is that existing shareholders ought to be given ample opportunity to take up additional shares, and that a Private Placement will subsequently only be considered as a last resort”

“We therefore request that you provide us with the following information to enable us fully understand the issues and exercise our rights as a shareholder.”

• Culled from THISDAY Newspaper

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