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Otedola-Obiagbena face-off over $225.8m loan dispute unsettle investors

THE ongoing battle between the owner of General Hydrocarbons Limited (GHL), Nduka Obaigbena, and the chairman of FBN Holdings Plc-the parent company of First Bank of Nigeria Limited, Femi Otedola, over a $225.8 million loan facility has unsettled the generality of investors’ confidence stakeholders told The ICIR.

Obaigbena, who chairs GHL, owners and operators of OML 120, deep offshore in Nigeria, and Otedola have resorted to a face-off over the loan facility.

This has got stakeholders and concerned Nigerians expressing their views and insights on the matter.

In a recent statement, Otedola assured of his commitment to protecting the integrity of the Nigerian oldest financial institution.

He spoke against the backdrop of the recent face-off with Obaigbena.

He accused Obaigbena of resorting to tactics simply because his company had been asked to repay the $225.8 million loan.

“This loan, facilitated with the help of the former Central Bank of Nigeria Governor, Mr Godwin Emefiele, was purportedly for the operation of an oil block, which he obtained without competitive bidding.

“However, the funds were diverted for personal use-funding Mr Emefiele’s presidential aspirations,  acquisition of luxury properties abroad, the operation of a private jet, and an extravagant $68 million spent on jet rentals in just four years,” Otedola asserted.

But Obaigbena defended his oil firm, confirming that the matter has been taken to court for the parties to resolve the differences.

He hinted that GHL has obtained a court order securing its operations pending the court’s determination.

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“We hope for a favourable outcome under our system of justice. Unfortunately, First Bank continues to disregard and disobey a subsisting court judgment in favour of GHL and instead has chosen to mislead the public,” Obaigbena said.

The recent face-off between the known individuals followed a recent court injunction restraining all commercial banks in Nigeria from releasing funds or handling assets belonging to GHL.

The oil firm had denied being indebted to FirstBank to the tune of $225.8 million.

According to GHL, it entered into a legally binding, enforceable Subrogation Agreement with First Bank on May 29, 2021.

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.

The FirstBank’s 50 per cent share was to be used to pay down the bank’s non-performing loans of about $718 million, which was discounted to $600 million to resolve its solvency issues, the GHL disclosed.

It said, “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.”

Court injunction

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FirstBank had, through a Federal High Court in Lagos, issued a Mareva injunction on December 30, 2024, freezing GHL’s assets linked to the $225.8 million loan owed to the bank.

The court order comes amid arbitration proceedings initiated by GHL against FBN’s alleged breach of their agreements.

According to GHL, a subsisting court order had restrained FirstBank from taking any step against its OML operations and loan requests.

The ICIR had earlier reported how some minority shareholders have demanded an Extraordinary General Meeting (EGM) to oust FBN Holdings’ chairman, Otedola, and a non-executive/deputy chief executive of Geregu Power Plc, Julius Omodayo-Owotuga.

The relationship between Obaigbena, who is deeply involved in the GHL-FBN dispute, and Otedola, who chairs FBN Holding, has added an intriguing dimension to the unfolding drama.

Amid the drama, the bank issued a statement assuring investors of taking all necessary steps to safeguard the interests of the company and its subsidiaries.

“This matter does not in any way impact the operations of the company, and all the businesses within the Group continue to provide uninterrupted services to its customers,” FBN said in a statement on Thursday, January 9.

Amid the escalating dispute, the Central Bank of Nigeria (CBN) has remained silent on the matter, despite the high stakes and potential systemic risks it might cause to the banking sector.

Stakeholders’ take on the matter

According to the national chairman of the Progressive Shareholders Association of Nigeria (PSAN), Boniface Oke, it was expected for such a huge loan facility, the apex bank would be in the know of the agreement between both parties.

“CBN must come out to clear the air because it cannot claim ignorance of such transactions, including NDIC. They must be aware of it.

He expressed that the banking business is built on trust and carried out on proper documentation.

He, therefore, urged other banks to learn lessons from what is happening between FirstBank and GHL.

“There must be total documentation. The CBN must be put on the known. This denial is harmful as all the shareholders will be made to bear the brunts. It is not good for the economy and banking system.

“The Banks must attach more security checks on all the customers they deal with, very important, no matter how big they are,” Okezie said.

He asserted that only the common man who gets loans and refuses to pay them back gets punished for it and jailed, but big men go scot-free.

The executive vice chairman of Highcap Securities Limited, David Adonri, said the law should be allowed to take its course on the matter.

He noted that financial disputes have been very rampant between banks and their customers in the course of business, pointing out that there are adequate legal and regulatory frameworks in the banking industry to get justice.

“CBN regulates banks and not customers. Any dispute between banks and customers that cannot be resolved internally goes to court for redress.



“The case between GHL and FBNH is just one of the numerous delinquent loan cases in the industry that banks grapple with daily,” he said.

Adonri also pointed out that the bank’s prudential guidelines stipulate how to provide for such disputes.




     

     

    “I don’t think that this matter is material enough to cause panic among investors,” he added.

    The national president of New Dimension Shareholders, Patrick Ajudua, corroborated that the matter is purely a business transaction between both parties.

    “I believe it should be settled legally within the context of the agreement signed. Hence, it has not much effect on us as shareholders of the bank.

    “I want you to realise that dispute can arise at any time in the normal course of dealings. Hence that is why it should be settled amicably or, in alternative, resort to the court for arbitration,” he urged.

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