The Battle For Soul of  FBHN  

In a bid to save the soul of First Bank Holdings of  Nigeria ,FBHN , some  stakeholders of the bank including its majority shareholders   are said to be joining forces to fight off Oba Otudeko from reclaiming control of the bank holding company.

 In a new twist to the shareholder jostle for control of FBN Holdings, Kunle Ogunba, and Associates, the receiver manager acting on behalf of Ecobank Nigeria Limited, has written a letter to FBN Holdings PLC, urging the company not to recognize shares transferred to Barbican Capital Limited.

The letter, dated July 7, 2023, comes in the wake of a Supreme Court judgment obtained by Ecobank against Honeywell Group Limited regarding outstanding loans owed to the bank.

The letter, authored by Kunle Ogunba and Associates, provides notification to the MD/CEO of FBN Holdings about the Supreme Court judgment that Ecobank secured against Honeywell Group Limited.

They claimed the judgment conclusively determined the indebtedness of the group to Ecobank and issued a directive for the repayment of the outstanding loans, including accrued interest.

The receiver manager also claimed Honeywell Group Limited, along with Siloam Global Services Limited, Anchorage Leisures Limited, Honeywell Flour Mills PLC, and Dr. Oba Otudeko, Chairman of Honeywell Group, had initially disputed their indebtedness to Ecobank.

It, however, pointed to a Supreme Court ruling on January 27, 2023, which it claimed affirmed the debt and ordered the defendants to settle the outstanding amount, which stood at N13.5 billion as of January 31, 2023.

Excerpts of the letter  

“Please be informed that our client instituted several lawsuits against Honeywell Group Limited, Siloam Global Services Limited, Anchorage Leisures Limited, Honeywell flour Mills PIc, and Dr. Oba Otudeko at the Federal High Court, Lagos, in view of recouping the humongous indebtedness of the highlighted entities to our client. It is particularly noteworthy that Dr. Oba Otudeko personally guaranteed the loan leading to the humongous indebtedness of the prior-mentioned companies.”

“Whereas, the prior-mentioned entities had initially disputed their indebtedness to our client and had consequently filed an action in court to that effect, the Supreme Court on the 27th of January affirming the indebtedness of the above persons to our client and further commanded that they must pay all the outstanding debts that have accrued under the loan contract between the parties;

being the same debt personally guaranteed by Dr. Oba O t u d e k o, which said indebtedness stood in the sum of N13,507,052,417.99 (Thirteen Billion, Five Hundred and Seven Million, Fifty -Two Thousand, Four Hundred and Seventeen Naira, Ninety-Nine Kobo) as at the 31st day of January 2023 whilst interest continues to accrue on the due debts as legally sanctioned by the Supreme Court of Nigeria, the highest court in the land, aforesaid!”

The letter expressed concerns over alleged efforts by Dr. Oba Otudeko, the guarantor of the debt, “to divert assets and funds” belonging to the debtor companies.

It stated that Barbican Capital Limited, a company reportedly “incorporated on March 9, 2023, after the Supreme Court judgment”, was involved in the acquisition of 4,770,269,843 (Four Billion, Seven Hundred and Seventy Million, Two Hundred and Sixty-Nine Thousand, Eight Hundred and Forty-Three) shares in FBN Holdings PLC.

It further stated that to prevent the ‘potential diversion of funds’ designated for debt repayment, Kunle Ogunba and Associates, on behalf of Ecobank’s Receiver Manager, requested FBN Holdings not to recognize the shares acquired by Barbican Capital Limited and its associated entities.

“We therefore demand that you respectfully stay/reject/approval/consent/registration/ ratification {howsoever described or in whatsoever manner} of the shares bought by the said Barbican Capital Limited held via the afforested entities, as proceeding with such approval/registration will be tantamount to assisting in the diversion of funds/assets meant for the payment of the debt which has been affirmed by the Supreme Court, same being a flagrant violation of the extant judgment of the Supreme and which has effectively determined the outstanding indebtedness between the Honeywell Group and our client, Ecobank Nigeria Limited.”

The letter also included a list of 19 companies which it claimed was where the shares from Barbican Capital were purchased from.

It also claimed that the “said shares purchased by Dr. Oba Otudeko albeit Honeywell Group Ltd. via Barbican Capital Limited are being held” in the names of ten underlisted entities which it also listed in the letter.

Additionally, the letter demanded that FBN Holdings provide detailed information regarding the transaction’s status within a seven-day timeframe (which will lapse on the 14th of July based on the date of the letter).

We also hereby demand that you avail us details of the status of the said transaction within the ensuing 7 {Seven}days}, noting that as a responsible Corporate entity, you are not expected to take any action which may be tantamount and/or construed to encouraging the subversion and/or violation of the extant judgment of the Supreme Court which undisputed mandated the Honeywell companies to pay their outstanding indebtedness {same debt personally guaranteed by the alter ego of the Honeywell Companies {Dr. Oba Otudeko} to Ecobank Nigeria Limited.

It is unclear if FBN Holdings will accede to this request as the bank has already notified the public via a letter to the NGX of a 13.3% acquisition of the shares as declared by Barbican Capital Ltd.

All efforts to reach Barbican Capital for their comment on this development were not successful as they declined to comment, according to a source close to the company

Meanwhile some of the majority shareholders of FBN Holdings Plc are said to be joining forces to fight off Oba Otudeko from reclaiming control of the bank holding company.

Reports reaching Nairametrics suggest the decision to join forces against Oba Otudeko is in response to the declaration of a 13.3% stake in the bank.

The shareholders are reported to be concerned about the consequences of having Oba Otedeko back in control of the bank in any capacity, following the debacle he had with the central bank two years ago.

Oba Otudeko troubles: Recall, in April 2021, the central bank removed Oba Otudeko as chairman and sacked the board of the bank.

 The apex bank explained the reason was mainly due to the apex bank’s regulatory forbearance and support in the corporate restructuring of the bank to protect it from failing.

The CBN claimed that because it had played a major intervention role that avoided a collapse of the bank due to bad loans and poor capital adequacy ratios, it had a major stake in how the bank is run.

The decision to fire the board, led by Otudeko was triggered because the current MD/CEO Sola Adedutan was removed despite having steered the bank into profitability after years of mismanagement.

The CBN reinstated him as MD/CEO and then proceeded to sack the board.

Otudeko’s forced exit from the bank paved the way for other shareholders such as Otedola and Odukale to cement their stake in the bank with all major shareholders appointing directors on the board of the bank and the holding company.

The billionaire owner of Globacom, Mike Adenuga, and the family of Arisekola are also major shareholders of the bank all with board representation. We understand  that the major shareholders of the bank jointly own about 28% of the shares of the bank as of December 2023.

Some of the holdings include shares owned by proxies, a familiar shareholding pattern in the bank.

We also understand more shares have been acquired by some of the shareholders in recent weeks culminating in the share price doubling in just about one month.

Shareholders join forces: One source indicates a meeting was held earlier on Friday by some of the shareholders to decide on how to take on Oba Otudeko, as they fear his return “might damage the progress” made by the bank over the last two years.

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  • The shareholders also believe they have enough votes in the bag to stall any possible return of Otudeko despite his declaration of a 13.3% stake in the bank.
  • They are also thought to be exploring other possible regulatory breaches around the failed declaration of the holdings by Otudeko as required by NGX and SEC regulations.
  • Shareholders who own more than 5% of quoted companies are deemed significant shareholders and are expected to declare the holdings in public.
  • Before now, only Otedola had declared about 5%.

CBN angle: The central bank is also understood to be watching proceedings and will likely make a statement soon as things unfold.

  • It is however unclear if they will be aggressive as they were under Emefiele’s leadership which was known to be strongly against the bank returning to Otudeko.

Emefiele has accused insiders of taking loans and exerting control over the directors o the bank, thus breaching prudential guidelines.

  • “The insiders who took loans in the bank, with controlling influence on the board of directors, failed to adhere to the terms for the restructuring of their credit facilities which contributed to the poor financial state of the bank. The CBN’s recent target examination as at December 31, 2020, revealed that insider loans were materially non-compliant with restructure terms (e.g. non perfection of lien on shares/collateral arrangements) for over 3 years despite several regulatory reminders. The bank has not also divested its non-permissible holdings in non-financial entities in line with regulatory directives.”

Other Considerations: Another source however suggested that Otudeko may be in a better position than he was two years ago as the Honeywell deal with Flourmills has helped him repay most of the loans putting him in a financial position to fight back.

  • However, he still faces an uphill battle against Ecobank who has a case with him at the Supreme Court on disputes over an unpaid debt.
  • We also expect the intervention of regulators in the coming days and weeks.
  • This is an evolving story that is pitting some of the powerful shareholders in Nigeria
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