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Wednesday, March 29, 2023

Another Case of Corporate Bullying or Hostile Takeover?

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The Access Bank vs. Seplat saga has proven that the corporate world can be more than just transactional; it can also be an infamous theatre of absurdity. Why did I say so? Please read on.

It all started in 2012 when Diamond Bank before being acquired by theentity once described as a Nigeria’s corporate bully – AccessBank – granted a facility to Cardinal Drilling Services [CDS] to acquire CDSrigs 101, 201, 202, and 203. The method of acquisition of this loan was a fairly simple fixed and floating debenture over Cardinal Drilling Services’ assets.

The facility, upon acquisition, was agreed to be serviced by CDS at therate of $85.8 million. Eight years later, by when Diamond had been acquired,Access Bank its new owner reasoned that CDS was unable to service the facility.So, in 2020, the bank decided to activate the sixth clause of the Deed of Debenture. This clause allowed it to appoint a manager or receiver over the assets of Cardinal Drilling Services.

Without  understanding the sequence of events leading to this, one may assume this is only normal. After all, the bank needed to take back what isits. However, things took a quick turn from admirable forthrightness in debt recovery to utter ridiculousness as Access Bank then went ahead to list a third party, Seplat and its chairman as co-defendants in the ensuing litigation. The bank’s slant for this action was that CDS rig 101 and CDS rig 201 were employed in Seplat’s operations the year before (2019). Additionally, the bank believed that all four rigs acquired in 2012 were critical to Seplat’s future drilling plans.

Perhaps the most arbitrary part of the entire saga was that Access Bank claimed, in its filing in the court that Cardinal Drilling Services has Seplatas a sister company jointly promoted by Seplat’s chairman, Ambrose Bryant Orjiako. Moving further, Access Bank accused Seplat of being the real debtor while Cardinal Drilling Services merely functioned as a vehicle smokescreen that Seplat used to subtly obtain the facilities earlier acquired.

In case the ludicrous nature of the claim is not clear, it would be helpful to imagine a fictional individual A being a friend with an equally fictional individual B. The latter borrows a pen from individual C and then individual C, in an attempt to repossess their pen, throws individual A under the bus for simply being an acquaintance of individual B. Of course, this does not even begin to fully cover all the intricacies of Access Bank’s decisions as well as the entire saga itself, but it does shed some light. In a nutshell, Seplat is not the real debtor.

If it was not already obvious, it is worthy of note that close observation of the letters, debentures, and guarantees, among others, revealed that Seplat truly was not a party to any of the transactions that led to the acquisition of the CDS rigs.

This notwithstanding, Access Bank was – to the surprise of many –allowed by the court to seal Seplat’s head office at 16A, Temple Road, Ikoyi,Lagos. It is worthy of note that the said head office is not merely aSeplat-only building, as it is owned by other businesses that operate in thearea. However, that is not the crux of the matter. It merely adds to it.

Having seized control of the company’s building, Access Bank went further to exercise the Mareva injunction granted it and seized the bank accounts, among other assets, belonging to Seplat. Then, it appointed KunleOgunba, SAN, as asset receiver-manager.

According to a statement signed by Mrs Edith Onwuchekwa, Seplat’sGeneral Counsel and Company Secretary, Seplat is not a shareholder in CardinalDrilling Service, and it certainly does not have any unsettled loans to AccessBank. Additionally, it did not commit to any agreement with regards to CDS andAccess Bank loan. Despite all these, according to the statement, Access Bankstill went ahead to seal the company’s office without following due processwhich includes giving prior notice, according to the law of the land.

These irrational moves by Access Bank are enough to drive one over theedge with unfettered rage, but Seplat, the victim of Access Bank’s new show ofpower took the high road. The company took its case to the Court of Appeal tochallenge Access Bank’s Mareva injunction and apply for a suspension of theinterlocutory injunction that allowed Access Bank to seal Seplat’s premises.

On the 22nd of January 2021, the Court of Appeal ruled in favour ofSeplat by ordering the immediate suspension of the injunction and interlocutoryinjunction that allowed Access Bank the freedom to seal Seplat’s property andcontrol their accounts. On the said day, the bank was duly represented by MsIfeoluwa Adolabi of Kunle Ogunba and Co. So, there is hardly any possibility offoul play, given the equal representation on both sides.

Having granted this order of suspension, the court ordered Seplat toexecute a bank guarantee with a reputable bank in the country for $20M. Beforethis order, Seplat had executed an early guarantee issued by Zenith Bank on the21st of January 2021 [see attached]. The guarantee was issued on behalf of SeplatPetroleum Development Company PLC, and Dr Ambrose Bryant Orjiako, two of themost affected entities in the dust raised by Access Bank’s latest stampede.

After the court had ruled on the 22nd of January 2021, Seplat executedanother bank guarantee issued by Zenith Bank on the 25th of January 2021 [seeattached], thus fulfilling its part of the legal requirements. With all thatbeing in place, the company moved to enforce the court order with a CertifiedTrue Copy at its offices that had been sealed by Access Bank. Seplat hadviolated no laws nor had it trespassed any bounds by enforcing the court orderon its sealed premises as well as its frozen accounts.

However, while appearing to throw the court’s ruling to the wind, Access Bank chose not to comply with the court order to release the company’s funds. Instead, it went ahead to notify all Seplat bankers that a Motion for Stay of Execution and a Notice of Appeal had been filed.

This happened on the 25th of January 2021, as Access Bank demanded for itsorders to be reinstated.

Having caught up with the entirety of the story, it is not hard to seethe absurdity of it all. Firstly, Access Bank accused Seplat of being a party to the transaction with virtually no proof whatsoever, particularly in 2020,when it provided no contradictory documents to Seplat’s denial of having a hand in the loan given. Then, it went ahead to disrupt Seplat’s operations while creating other problems for the company’s direct and indirect stakeholders. Somehow, Seplat fought for itself and gained back what was its. But, AccessBank filed another motion and notice to the court.

Everything that has happened so far begs one simple question – why? Why does Access Bank choose to act this way, kicking and throwing tantrums like an over-indulged teenager who is bent on having his way? Why does it choose to ignore the obvious and go to the most absurd extent in order to have its way?

A school of thought familiar with the bank’s modus believes it may be trying to execute another hostile takeover or it may be having financial troubles it is trying to solve the gung-ho way. Given the desperation with which it is acting, neither of these will be far from the truth. The only sad thing is the trauma and losses its latest drama is causing the victim – Seplat.

At this stage, one can only hope that justice prevails because, frankly,this theatre of absurdity has outgrown its fascination and descended to amacabre display.

Irewole O.J is a Lagos-based media researcher.


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