The media recently reported an interim order obtained by AMCON appointing a receiver/manager over ABC Orjiako’s assets both within and outside the shores of Nigeria. This included Shebah Exploration & Production (E&P) Company Limited and Allene BVI Limited.
We all know that stories are better told, when underlying questions are asked to unravel hidden facts.
Yes, AMCON made the move in line with the tenets of its existence but it ignored questions on what transpired during the long transaction processes. Regulatory moves without proper investigation would impact negatively on businesses.
No doubt, most industry watchers and legal experts have followed these development closely, as it agrees with cross boarder laws, processes and judgement enforcement.
Like AMCON, every government established institution is expected to encourage investments. Although, opportunities abound in the oil and gas sector of the economy but many of such opportunities are capital intensive accompanied with CAPEX risks.
Besides these risks, cost overruns and schedule delays are common and most financiers often underestimated them.
While loan facilities are good for viable businesses, they can fairly be tagged “bad”, if established that there is no intent to repay. Interestingly, this is not the case in this issue against Orjiako.
The message is that whether or not recent developments are deliberate , the truth is that any stone thrown at him is best described as one detrimental to the economy because he has positively changed the global narratives about doing business in Nigeria as shown in areas he has made marks.
Disappointingly, this is happening when President Muhammadu Buhari is looking forward to investors making inroads to Nigeria, evident in his recent trip to Japan.
Aside Seplat, Orjiako is on the board of companies in various sectors. He is the chairman of Neimeth Pharmaceutical International plc, listed on the NSE; a director of MPI, listed on the New York stock exchange (NYSE), Euronext Paris and a director in Leadway Assurance Company Limited.
By invitation of the London Stock Exchange (LSE), he became a founding member of the London Stock Exchange Group’s Africa Advisory Group (LAAG), a select group working towards generating, channelling ideas and solving problems affecting the African continent from a commercial and social perspective.
How it all started
In 2012, Shebah E&P obtained a $150 million loan facility from a consortium of banks (Afrexim/Diamond now Access and Skye bank now Polaris) led by Afrexim. The purpose was to fund the drilling campaign at the Ukpokiti field (OML 108) operated by Shebah E&P.
In the offshore Niger Delta, Shebah drilled a successful horizontal well – first of its kind – and tested 4,000 barrels per day (bpd) of oil and condensate production. However, it encountered large gas reserves.
Then, the company decided to find a solution to the huge associated gas based on professional oil field best practices before it continues the oil/ condensate production. Shebah required more funds to commercialise the gas to avoid excessive flaring while producing the discovered oil.
Afrexim led a consortium of lenders, but could not provide further facilities to conclude Shebah’s operations. In 2014, Shebah approached Zenith Bank, who appraised the situation and provided a $200 million loan facility fully approved by its board..
Zenith proposed to pay the consortium $50 million to reduce their collective exposure, enhance the facility to $300 million, provide Shebah with additional funds to monetise the gas and produce the discovered oil.
In line with Shebah’s need, Zenith bank further requested to have a moratorium period of nine months to conclude the projects and extend the facility tenure to five years. This was meant to spread the cash flow and enable easy repayment of the enhanced facility.
Surprisingly, the Afrexim consortium rejected the $50 million offered by Zenith Bank on the grounds that Zenith should not lead the syndicate, while not willing to extend the tenure of the facility which should be over in about two and a half years upon Zenith’s offer.
The Afrexim consortium rejected all the efforts being made by Shebah and proceeded to file an action to call the facility in 2014 (just two years after final draw down). The call ahead of the maturity triggered default on the loan.
On the 19th of February 2016, Justice Phillips of the London High Court, delivered a judgement in favour of the Afrexim consortium for the repayment of the $150 million loan facility.
The creditors further registered the judgement in the Federal High Court in Lagos applying for an enforcement of the judgement. The defendants (Shebah E&P and ABC Orjiako) immediately opposed the registration and the judgement enforcement based on their rule of law convictions, stating their willingness to negotiate settlement and loan repayment out of court under a restructured arrangement.
This case is still pending before a federal high court in Lagos. The next hearing date is October, 2019.
Contrary to the syndication agreement by the Afrexim consortium, Polaris Bank unilaterally transferred its share of the judgement facility to AMCON.
Notwithstanding, the unilateral action by Polaris Bank, AMCON should have joined the existing court case in the federal high court Lagos but instead it initiated a fresh action in the federal high court Abuja, giving no concern to a case already rule upon in London and subject to contested enforcement proceedings in the federal high court Lagos.
It is by the fresh case that AMCON obtained the Ex-Parte order reported by various media platforms.
There are indications that the second defendant ( Orjiako) who was the loan guarantor had provided about $68 million to Shebah to pay the AFREXIM consortium toward the repayment efforts prior AMCON’s intervention.
Worthy to note, this payment indicates a strong willingness to settle debt. The media reports of AMCON’s purported move to impound the personal assets of Orjiako and Shebah can only cripple their efforts to meet the debt obligations.
This portends a strong disincentive to the spirit of encouraging investments in the country.
SEGUN ADEOYE
Adeoye, an economist & public affairs analyst based in Abuja
