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  • GHL Vs First Bank: Oil Firm Threatens $1bn Lawsuit Over OML 120 Failed Development
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GHL Vs First Bank: Oil Firm Threatens $1bn Lawsuit Over OML 120 Failed Development

ovanews 6 months ago 4 min read
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… As Shareholders Push For Otedola’s Removal, Otudeko’s Return

General Hydrocarbons Limited (GHL) has threatened to sue First Bank of Nigeria (FBN) for $1bn in damages over an alleged breach of contract regarding the funding of Oil Mining Lease (OML) 120, just as shareholders push for leadership changes at the bank.

This comes amid the oil company’s allegation that First Bank failed to fulfil its obligations under their agreement to explore and develop the oil asset.

First Bank’s alleged breach of contract caused GHL severe losses, including over $47m and 217 days of lost operations, according to documents made available to THISDAY.

The situation was further complicated when First Bank obtained a court injunction freezing GHL’s funds worth $225.8m across all commercial banks in alleged violation of an existing court order.

“An order is granted, restraining the Respondent either by itself or acting through its servants, agents, assigns, privies, and affiliates howsoever described, including any person claiming under its authority from making any calls or demands or taking any steps whatsoever to enforce any security receivables, instruments, finance documents, or assets of the Applicant that have been charged as security for the facility agreements in respect of the Applicant’s operation of OML 120.

“This includes but is not limited to, the said letter and the amended and restatement agreements between the applicant and the respondent pending the hearing and determination of the arbitration proceedings between the applicant and the respondent brought under Clause 12(c) of the Agreement between the Applicant and the Respondent dated May 29, 2021,” the court document showed.

First Bank Chairman Femi Otedola and other directors now face arrest for contempt of court following their alleged decision to secure a Mareva order without disclosing to the court that the case had already been argued and determined.

The Managing Director/Chief Executive Officer, Mr. Olusegun Alebiosu, also faces contempt charges alongside other directors.

GHL further claimed that the dispute has exposed it to severe financial challenges, including a $15m default penalty due by November 14, 2024, for the TotalEnergies farm-out of the Noble Rig.

GHL said it faces additional exposure to global service providers such as Schlumberger, Baker Hughes, Century FPSO, Marine Platforms, and Halliburton.

“More importantly, FBN is putting at risk the repayment of the outstanding exposure to AMCON and the repayment of its new facilities under the MOU and seeking to create Atlantic Energy 2 by trying to orchestrate another non-performing loan situation.

“GHL will resist this with all the powers of the law and will not allow any non-performing loan in its name as we remain committed to meeting all our obligations. In addition, FBN’s non-payment for the TotalEnergies farm-out of the Noble Rig (drillship) has exposed GHL to an over $15M default penalty by November 14, 2024, which FBN is fully aware of.

“These costs are in addition to further millions of dollars in costs and exposures to global service providers like Schlumberger, Baker Hughes, Century FPSO, Marine Platforms, Halliburton, etc. For over three years, despite demands from GHL and in line with all the signed agreements, FBN has refused, failed, and neglected to pay salaries and operating expenses of GHL staff, offices, and operations.

“If they cannot pay for GHL personnel and operations, how do they plan to pay for an additional independent asset manager when GHL has already appointed ab initio Schlumberger and Baker Hughes as joint technical operators and advisers?” THISDAY reported the oil company as saying.

The GHL management said their agreement with First Bank, which involved funding the optimal exploration and development of the oil asset, had helped the bank avoid an N302bn loan loss provision, which it said contributed to the bank declaring a profit of N151bn for the year ending December 31, 2021.

“Having saved them this massive hit, FBN’s books now became performing, avoiding a market punishment and loss of confidence that would have followed their loss, which they may never have recovered from as a result of their reckless lending.

“At GHL, we are wondering if FBN used us to get to profitability under pretences, knowing that they had no intention of meeting their financial obligations to GHL of fully funding the optimum exploration, development, and production of OML 120 as events would later show,” part of the document read.

Meanwhile, a group of shareholders holding 10 per cent of First Bank Holdings Plc shares are said to have formally requested an Extraordinary General Meeting (EGM) under Section 215(1) of CAMA.

The shareholders are seeking the removal of Otedola and the non-executive/Deputy Chief Executive of Geregu Power Plc, Omodayo-Owotuga while proposing the return of Mr Obafemi Adedamola Otudeko to the board.

The shareholders, including Barbican Capital Limited and Norsworthy Investment Limited, also opposed the bank’s N350bn private placement proposal, advocating instead for a rights issue.

They argued that existing shareholders should have priority in any capital-raising exercise.

GHL Vs First Bank: Oil Firm Threatens $1bn Lawsuit Over OML 120 Failed Development is first published on The Whistler Newspaper

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