General Hydrocarbons Limited (GHL) has declared that it does not owe First Bank of Nigeria Limited $225 million.
It faulted the Mareva injunction granted by Justice Deinde Dipeolu of the Federal High Court in Lagos based on an application by First Bank and FBNQuest Trustees Limited.
Recall that the court had restrained financial institutions in Nigeria from releasing funds to the company owned by Nduka Obaigbena, Chairman of Arise and publisher of ThisDay Newspapers.
Also barred were the accounts of Efe Damilola Obaigbena and Olabisi Eka Obaigbena (first to fourth defendants), who are GHL directors.
But, in a statement by its Director of Strategy and Operations, Abdelmuizz Bello, GHL accused First Bank of abuse of the court process.
The company said it entered a legally binding, enforceable Subrogation Agreement with First Bank on May 29, 2021.
GHL said the bank agreed to fund its exploration, production and development of OML 120 in exchange for sharing profit from oil proceeds from the OML in a 50:50 ratio after statutory payments and taxes over eight years.
It said the FBN’s 50 per cent share will then be used to pay down its non-performing loans of about $718million, which was discounted to $600million to resolve its solvency issues.
The statement reads: “In its quest to stay afloat, the FBN loan was sold at $600million as an Eligible Banking Asset (EBA), with comfort from GHL; the FBN then collected the cash from Assets Management Company of Nigeria (AMCON) with which they rebuilt the bank without meeting GHL’s needs.
“The FBN non-performing loan arose from FBN’s unsecured and reckless lending to Atlantic Energy under separate Strategic Alliance arrangements, in which GHL had no nexus to or connection with.
“The agreements made it clear that the Non-Performing Loan had nothing to do with GHL beyond the fact that 50 per cent of profits from OML 120 due to FBN under the Subrogation Agreement will be used by FBN to settle the hole created in its books by the Non-Performing Loan (NPL).
“For clarity, Atlantic Energy operated OMLs 26, 30, 34 and 42 – very different from GHL’s OML 120.
“The agreements signed with GHL enabled the FBN to return to good standing as follows:
“Instead of declaring a loan loss of N302Bn at the then exchange rate, the signing of the Tripartite Agreement with GHL enabled FBN to declare a profit of N151Bn ($377.5million) for the year ending December 31, 2021.
“GHL signed the agreement trusting and believing that the FBN which it thought was a bank with integrity, would comply and continue to comply with its obligation to fund OML 120; FBN’s failure and refusal to do so has opened a challenge to its audited financial statement. Given its non-compliance with conditions precedent for its return to profitability, could those profits remain valid? And were investors in its current rights issues duly informed?
“FBN’s market capitalization before the agreement was N256.6bn. Had it declared a loss of N302Bn, the bank would have had a negative capital of N46Bn.
“FBN then immediately realised profitability from the GHL’s subrogation agreement. GHL signed the agreement believing and trusting that the FBN as a bank with integrity would comply and continue to comply with its obligations to fund OML 120, but it has clearly not done so.
“Following the agreements with GHL, FBN’s market capitalisation of N256.6Bn, more than tripled to over N900Bn as of 30th November 2024.”
