"The company is insolvent and unable to pay its debts. In the circumstances, it is just and equitable that the company should be would up." Such is the conclusion Access Bank Plc. has reached about African Petroleum Plc. (AP) following AP's failure to repay the bank $35.1 million.

In a two-page statement carried in two national newspapers yesterday, Access Bank, through it's legal counsel, Olisa Agbakoba and Associates, published details about a case currently at the Federal High Court in Lagos.

The statement read, "The company (AP) is indebted to your petitioner (Access) in the sum of US $35,153,822.15 (approximately ₦5.2 billion), being the outstanding obligation on the Letter of Credit (LC) opened by the petitioner (Access) on 18th July 2008, on behalf of the respondent (AP) to facilitate the importation of petroleum products."

According to the statement, "the Plc was established and booked on 18th of July 2008 and matured on December 1, 2009," but "upon maturity of the LC, the Company was unable to settle the LC obligation of $US35.1 which is still outstanding as at the presentation of this petition."

In the statement, Access Bank stated that it wrote several times to AP to settle its debt; on January 02, 2009, March 2, 2009, March 26, 2009 and May 25, 2009, but "despite the various correspondences above, calling on the company to settle its LC obligation, the company failed to act accordingly, by settling the amount due." The court case has been adjourned till Wednesday July 22, the same day as AP's annual general meeting.

Legal permission

The statement by Access Bank's lawyers, was preceded by two pages of court documents. On one page was a Federal High Court Lagos order giving Access Bank "leave to advertise the petition." On the second page was an "Affidavit verifying Access Bank Plc Petition," signed by Louis Enahoro, the company secretary of Access Bank and a legal practitioner.

The case is described as "In the Matter of Africa Petroleum Plc and in the matter of the Companies and Allied Matters Act, Cap C.20 and in the Matter of an Application for winding up pursuant to sections 408, 409 and 410 of the Companies and Allied Matters Act, Cap. C.20" between Access Bank Plc (the Petitioner) and African Petroleum Plc (Respondent)."

According to section 408 of the Act, "a company may be wound up by the court" for several reasons, including "if the company is unable to pay its debts" and "if the court is of opinion that it is just and equitable that the company should be wound up."

Section 409 of the Act states that "a company shall be deemed to be unable to pay its debts if - a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding 2,000 then due has served on the company, by leaving it at its registered office or head office, a demand under his hand requiring the company to pay the sum so due, and the company has for three weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor."

According to Section 410 of the Act, "an application to the court for the winding up of a company shall be by petition presented subject to the provisions of this section," by several parties including the company itself and "a creditor, including a contingent or prospective creditor of the company."

Central Bank pressure

On June 19, 2009, the Central Bank of Nigeria (CBN) sent a circular to all banks, demanding that they "submit to the Ag. Director of Banking Supervision, details of their total exposures to the companies in the Energy Sector, namely Up-Stream, Down-Stream and Oil Service companies, as at May 31, 2009."

Lamido Sanusi, the governor of the Central Bank, in his first official speech as governor on July 07, 2009 said, "the CBN surveillance activities will receive new impetus to ensure efficient management and good corporate governance"

In stating the central bank's view that the Nigerian banking sector does not face a systemic risk, he said, "our view is that there are stress points in banks' balance sheets (margin loans, proprietary positions, oil marketing names, unsecured large exposures) and these are being dimensioned."

The Access-AP court case has thrown up one such "stress point." Banking and industry observers await Wednesday July 22 - when the court will give its judgement and the same day as AP's Annual General Meeting.

Access Bank Plc is amongst the top 10 Nigerian banks by assets. It's headquarters is in Victoria Island, Lagos . Access Bank's group managing director/chief operating officer is Aigboje Aig-Imoukhuede.

African Petroleum (AP) is a Nigerian major marketer of refined petroleum products, with it's head office in Marina, Lagos. AP's Chairman and Chief Executive Officer (CEO) is Femi Otedola. Mr Otedola is also the CEO of Zenon Petroleum & Gas Limited, a petroleum marketing and distribution company.

presido1:

Dangote is going down, Otedola is going down.
Whoz next?

philip0906:

4 where?d'u think they will come and tell us how much they have?they r trying 2 play along with the recession and make it look like they 2 r having problems.atleast 4 now in naija,none of these people will go down.never cos even if,they always have their way of turning around.Next thing u'll c on the headline of a business magazine in 4 years 2 come is "HOW I MANAGED TO TURN AROUND AFRICAN PETROLEUM,AND BECOME THE RICHEST BLACK MAN ON THE PLANET"-Femi Odetola.

back2back:

And so OBJ house-of-cards already started collapsing.

presido1:

Dangote is going down, Otedola is going down.
Whoz next?

MrCrackles:

I personally dont think Femi Otedola is in trouble. . . . .
Looks like AP/Otedola camp is up to something
[b]Access Bank will get thier money but whether they will get it according to thier own terms or AP/Otedola's terms, i dont know. . . .[/b]Fingers crossed and very interested in the final outcome on this one!

asha 2:

Is this not related this topic i posted yesterday.If only nairaland spam bot will allow me to past it.

https://www.nairaland.com/nigeria/topic-299088.0.html

philip0906:

4 where?d'u think they will come and tell us how much they have?they r trying 2 play along with the recession and make it look like they 2 r having problems.atleast 4 now in naija,none of these people will go down.never cos even if,they always have their way of turning around.Next thing u'll c on the headline of a business magazine in 4 years 2 come is "HOW I MANAGED TO TURN AROUND AFRICAN PETROLEUM,AND BECOME THE RICHEST BLACK MAN ON THE PLANET"-Femi Odetola.

presido1:

Not when Mend is blocking their channel. When resource control if fully implemented will then know who is the real entrepreneur and the Govt aided entrepreneur.

larez:

The answers all lie in the small prints of their agreements. Access Bank has opened up a potential liability hole by creating a threat to the share price of the company by attempting to induce panic. But then, in Nigeria, it could be a concerted ploy by both Access Bank and A/P to force shareholders to panic and sell, while they buy back the stocks at a reduced rate and retire them internally. This will in-turn raise the value of the company.

EFCC should begin their investigations into this drama because I personally believe that this is a case of the more you see, the less you know. Racketeering is widespread and profitable in Nigeria's financial markets. The question to ask yourself is why Access Bank will try this case in the news media, while they have supposedly filed a case. I gag order should have been in place upon filing.

tomylee:

It is not the duty of access bank to label AP a bankrupt company. I think this whole issue is a drama by access bank to get their money back from the AP. What financial evidence do they have to prove this bankrupcy thing apart from their so called unpaid loan.

He explained that pursuant to financing of the vessel, AP opened a form M with at the Central Bank of Nigeria (CBN) and letter of credit was opened at the rate of N116 to a United States dollar.

He added that trouble started when Access Bank on December 2, 2008 sent a debit advice, saying the money should be paid using an exchange rate of N127 to a dollar.

calyx:


So AP wants to pay back at the 116/$ rate they borrowed the money abi. What was the naira/$ rate at the time they want to repay. Consider the cost of the foreign transaction and all. Is the bank a charity organisation Abeg make una go pay wetin una owe jare

There is the base rate of the transaction which is locked as of the date of this transaction. Bank charges and interests are a separate affair from this. The exchange rate at the date and time of the transaction is locked. Anything else will be based on this locked rate.

akintun:

Insolvency law allows a creditor to go to court after fullfiling certain conditions and demand that its debtor should be liquidated compulsory. The case between Access bank and AP would be decided depending on the contract signed. If AP did not sign a forward contract then it will have to pay back the money it owes the bank using the exchange rate on the day Access bank transfered money to AP business partner's bank abroad.

dedeike:

this is bad news.i just hope the analysis by larez is true. our economy cannot afford such bankruptcy in these days of recession.

larez:

There is the base rate of the transaction which is locked as of the date of this transaction. Bank charges and interests are a separate affair from this. The exchange rate at the date and time of the transaction is locked. Anything else will be based on this locked rate.

MrCrackles:

I quite agree with this. . . . .
Dat is the norm pretty much everywhere else!