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The interest being generated by the purported investment of $1bn into Unity Bank by Milost Global Inc. has continued to elicit comments from analysts even as the tier two lender has maintained its stance that at no time did it execute a binding offer with Milost.
In a statement filed with the Nigerian Stock Exchange on Thursday March 29, Unity bank remained unbending on its earlier position that no investment of $1 billion from Milost Global was made in Unity Bank Plc.
“The “Term Sheet” dated September 4,2017 said to have been executed was a “proposal” submitted by Milost Global Inc. “for discussion purposes only and NOT a commitment” by the parties. No definitive documentation governing the proposed financing was executed,” the statement read.
The bank’s share price fell 0.8 percent on Thursday, according to Bloomberg data.
Unity’s denial comes on the heels of recent claims made by Milost that the former signed a binding commitment agreement for a purpoted $1 billion financing deal.
The bank confirmed that Oluwatomi Somefun, the bank’s CEO visited Milost’s New York office to discuss the deal.
Somefun “was in New York in October 2017 for other engagements and decided to visit Milost and verify the firm’s address as well as put a face to the officers of Milost that have been engaging the Bank via telephone and emails,” the statement read.
“A brief meeting” was held and discussions were around the dynamics of Milost proposal to Unity Bank Plc, and socialization of the policies and regulations around equity investment in Nigeria, the bank said.
Analysts are of the opinion that it will be almost impossible for the Executive Management and the Board of a financial institution in Nigeria to execute a binding offer without proper engagement with relevant stakeholders in the financial market.
“As required in any investor-investee relationship, preliminary and confirmatory due process must be followed before such investments can be affirmed”, said a source familiar with the transaction.
The Bank had in a previous statement informed that although it has been involved in series of engagements with several prospective investors including Milost but no conclusive deal has been struck.
Milost, which says it has over $25 billion in “committed capital”, reacted to this by accusing the latter of lying that no agreement was signed by both parties.
“It is normal practise 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,” Milost said.
Unity however debunked any plan to move its listing to the US.
“That is bizarre and unrealistic,” two persons familiar with the matter said.
The Bank is said to have been focusing on its recapitalization drive and had pledged to continue to engage stakeholders on subsequent developments and achievements in this regard, according to the people who did not want to be named, due to the sensitivity of the matter.
In April 2017, Unity, which was formed out of the merger of nine banks between December 2005 and March 2006, said it was in talks to sell its non-performing loans to avoid penalties after missing a regulatory deadline to file its recapitalization plans.
A slump in global oil prices that contributed to Nigeria’s first recession in 25 years in 2016, hammered some small- and mid-sized lenders as they were faced with deteriorating loan books and weak asset quality on the back of loan defaults by businesses acute dollar shortages.
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.
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 amid speculation to the contrary.
The bank admitted that its on-going recapitalization programme meant they were talking to a number of investors to raise money but had not received any commitment for investment of $1billion from Milost.
Several calls made to Milost’s New York number on its website went unanswered. That’s hardly a surprise given that Milost itself admitted to not entertaining journalists in the statement it issued.
“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.
Meanwhile, another company- Aso Savings and Loans Plc- linked by media reports over a financing deal purportedly worth $250 million with Milost, has also debunked such claims.
“We dismiss this claim and wish to state that ASO had at no time issued any notice to Nigerian Stock Exchange (NSE) as purported in the media. ASO Savings & Loans Plc has not entered into any agreement with Milost Global Inc. Members of the public are implored to disregard the false news that has pervaded the media,” the bank said in a filing at the stock exchange.
“Any change to ASO’s business structure or operations will be duly communicated by the Bank through the appropriate channels,” the bank said.
