Milost Global Incorporated yesterday released a confusing and rambling response to BusinessDay’s Monday report in which it accused Unity Bank of lying and said the tier two lender agreed to delist from the Nigerian Stock Exchange (NSE), and move its primary listing to the USA.
The purported U.S based Private Equity (P.E) firm said that “On Monday, October 23, 2017 at 11:05 EST, Milost Global Incorporated was visited by Oluwatomi Somefun, the CEO of Unity Bank Plc, at its New York Offices. The meeting was scheduled for 11:00am EST and it went ahead as planned.
“The meeting was attended by Milost Global Inc. analysts and the Chairman Egerton Forster. At the meeting, she explained the need for capital funding at the bank and also their expansion plans.”
Unity Bank was not immediately available for comments when BusinessDay called.
The statement by its Managing Partner and CEO, Kim Freeman, Milost Global Incorporated also officially announced the termination of the Unity Bank Plc transaction.
Milost Global said on August 7, 2017 it received a request for a call with the CEO and CFO of Unity Bank Plc, adding that on the call, Unity Bank expressed its interest in working with Milost Global Incorporated as its funding partner for its growth plans in Nigeria.
“Following the call, a desk top due diligence was conducted by Milost to its satisfaction. On September 4, 2017 a $1 billion financing term sheet was fully executed by both Milost and Unity Bank. The facility, a combo of equity and debt, was provided on the exciting understanding that Unity Bank would delist on the Nigerian Stock Exchange and move its listing to the USA. The signed term sheet was approved by the board of Unity Bank,” Milost said yesterday.
Central Bank of Nigeria (CBN) has been monitoring the whole drama at Unity Bank Plc, which is under regulatory watch. Insider sources said CBN is swiftly moving to start investigations on this development. CBN would need to acknowledge receipt of Certificate of Capital Importation (CCI) for all alleged inflow of funds from Milost to its targeted companies in Nigeria.
Bloomberg had on March 19, 2018 reported that Milost was looking to inject as much as $1 billion (about N360billion) to recapitalise Unity Bank Plc.
Milost said Bloomberg article was “very factual except that Milost was to acquire 30percent of the bank, whereas in reality Milost was to take a controlling 60percent of the bank at closing, in a transaction that would retain the same board members and the same management for continuity of operations.”
On March 21, Unity Bank Plc in a letter to the Nigerian Stock Exchange (NSE) notified shareholders and other stakeholders of the bank that it has not reached any agreement with Milost to warrant such speculation.
The bank made further clarification that’s regarding its on-going recapitalization programme that it has not received any commitment for investment of $1billion from Milost Global Incorporated.
Milost added that Bloomberg tried to reach them by “email but we didn’t respond as we don’t usually entertain journalists”.
This is exactly the same manner they disregarded BusinessDay emails and calls but in their statement they said, “Milost Global Inc. wishes to clarify this due to the repeated unprofessional conduct of Business Day Nigeria…who are failing to verify facts and communicate with all sides before print.”
“Last week, Unity Bank issued a false statement which denied signing a binding commitment agreement, disputing a factual and founded Bloomberg article that initially reported on the transaction”, according to Milost.
“It was then agreed that Milost Global Inc. would start further due diligence on Unity Bank Plc. Further due diligence process started on the same week on the instruction of the Chairman of Milost Global Inc., Egerton Forster. Further due diligence was satisfactory and Milost issued a binding commitment agreement to Unity Bank which was approved by the board of Unity Bank and executed by both parties on November 14, 2017,” the statement reads.
“It is normal practice for all the publicly quoted companies which we fund to notify the market regulator on signature of the commitment letter since it has material effect to the stock; however, Unity Bank did not. Milost assumed that this did not happen because Unity had agreed to move its listing to the USA,” according to Milost.
Milost claimed in the statement that soon after the Bloomberg story broke, the New York based PE firm “started receiving threatening emails from a gentleman who says he is politically connected to the powers that could shut Milost out of Nigeria if Milost didn’t terminate the Unity Bank transaction.”
“The said individual was very well informed about our dealings with Unity Bank such that he knew the audit group Milost had hired to carry out the final due diligence.
“He told Milost to tell the board of Unity Bank that the audit firm had instructed Milost that Unity Bank was a bad investment, failing which he would unleash the media on Milost using among other things accusations that would cause the government to send Milost packing. These threatening emails were shared with the CEO of Unity Bank and the then CFO Ebenezer Kawole”, Milost further stated in the statement.
Milost claims that following the purported threatening emails from those it said are ‘politically connected’, “negative articles by BusinessDay Nigeria started appearing accusing Milost of operating a pump and dump operation.”
“At that point Milost realized that the original threats had begun to materialise, because after that first BusinessDay article on its alleged pump and dump, another email was received confirming that it is the work of the blackmailer.”
Questions are now being raised on the market surveillance unit of the Nigerian Stock Exchange (NSE) seen to have been asleep and not spotting the misleading disclosures.
Meanwhile, our source at the Securities and Exchange Commission (SEC) said the commission is swooping in with investigations on Milost operations in Nigeria.
“If anyone is found guilty definitely we will apply sanctions,” our source added.
For the Nigerian Stock Exchange, it was a hard start to the week as most of their staff engaged in marathon meetings after BusinessDay report exposed the activities of the Milost entity.
This would have sullied the Nigerian stock market adjudged amongst world’s top-3 best performers in 2017. Whistle blowing is allowed in the stock market and the media professionals are integral participants in the whole process.
Before now, the Nigerian Stock Exchange has shown commitment to maintaining a fair and orderly market.
On May 12, 2017, the Nigerian Stock Exchange issued a circular on publication of announcements or press releases via the issuers’ portal which among others require that information on that portal “must not be misleading and shall not exclude or omit any material facts.”
Through the NSE issuers’ portal, Japaul Oil & Maritime Services Plc, a Nigerian oil-services company said it signed an agreement with Milost for $350 million (N126billion) in shares and loans for business expansion.
Japaul said Milost will invest $250 million (N90billion) in equity and add another $100 million (N36billion) in convertible loans.
Japaul Oil Plc is valued at N3.945billion on the stock exchange and has 6.262 billion shares outstanding.
Also using the NSE issuers’ portal, Resort Savings and Loans Plc, another listed company disclosed its link with Milost over a deal worth $250 million.
Resort Savings said the transaction will take place through a private placement, subject to the approval of the NSE, SEC and the Central Bank of Nigeria (CBN).
For Resort Savings, the financing agreement with Milost Global is that it will invest $250 million in the bank comprising $100 million (N36billion) as equity capital and $150 million (N54 billion) as debt.
In the past years, the shares of mortgage bank have not attracted equity investors. At the NSE, the mortgage provider remains a delinquent filer of audited accounts with a raft of MFR (Missed Regulatory Fillings) for non-rendition of audited financial statements for 2015 and 2016.
The mortgage bank’s market capitalisation is just N5.6 billion, according to data on the Nigerian Stock Exchange (NSE).
Interestingly, BusinessDay in a March 12 article titled “The Math does not add up with Milost,” laid bare the incongruity of some of the proposed investments by Milost.
Despite these, the Market Surveillance Unit of the Bourse which is a key unit within the Regulation Division, slept off in its mission to protect the integrity of the capital market from fraud, manipulation and abusive practices.
The Unit is expected to closely monitor all market activity on the Exchange to cultivate an open, competitive, transparent, and financially sound market.
Their areas of focus include: inside trading, market manipulation and abuse, pump and dump, false press release, paid promotions or analyst recommendation, churning circular or triangular trade, front running, and violations of rules governing members’ on-floor trading.
BusinessDay has it in confidence from a regulatory source that a Managing Director of a listed company was upset with the Chief Financial Officer (CFO) for “running his own show on Milost Global Incorporated”. “CFO has his own game he is playing. He seems to be working with Milost”, the source added.
Amid this disclosure, the Surveillance Unit of the NSE failed to question issuers’ move that created bubble and brought some uninformed investors down their knees in an N15trillion equity market.
In 2013, The Nigerian Stock Exchange joined the Inter-market Surveillance Group (ISG). ISG is an international group comprising of securities exchanges, market centers and market regulators that perform front-line market surveillance within their respective jurisdictions. The NSE’s membership validates its strong commitment to operating at high standards.
Solly Asibey, Senior Partner & CIO of Milost, stated, “We will not be deterred by media attacks that are baseless and unfounded. Our funding objectives for the Nigerian market remain solid and unwavering.”
Asibey claimed that: “Milost Global Inc…will soon be releasing the first and second drawdowns to Japaul Oil & Maritime Services Plc to the total of $21 million in a combo of equity and debt. Another first and second draw down proceeds of $10 will be released to Resort Savings & Loans PLC; the funds will be released to both company within the month of April.”
Analysts tell BusinessDay that with the regulatory authorises now actively monitoring the situation, it will be easy to tell if an actual Certificate of Capital Importation (CCI) will be issued by the CBN on these proposed deals.
Unity bank’s share price rose 4.65 percent to N1.35 Monday, according to Bloomberg data, outperforming the banking average of 2.47 percent.
IHEANYI NWACHUKWU & LOLADE AKINMURELE
