The Origin and Facts Behind ABC Orjiako Loans


It is no longer news that a Federal High Court sitting in Ikoyi, Lagos, recently granted a Mareva injunction restricting Shebah Exploration and Production Company Limited (Shebah E&P), Shebah Petroleum Development Company Limited, and co-founder and chairman of Seplat Energy Plc., Dr ABC Orjiako, to withdraw from the accounts of nine other defendants and 29 banks. The interim order was issued by Judge Yellin Bogoro who issued the interim order on Friday while granting an ex parte claim from Mareva requested by Zenith Bank Plc. through his counsel, Mr. Kemi Balogun (SAN), in the case of an alleged debt of $ 78.4 million.

What worries analysts is what they describe as deliberate mischief, a smear campaign and a misrepresentation of the facts and the person of Dr. ABC Orjiako. They also fear that this development has far-reaching implications for international investors who are watching the matter closely.

They do not hesitate to refer to an analysis written by a certain Bayo Akinloye. Among other things, he wrote: “Huge non-performing loans erode trust and threaten the continued existence of a financial institution. This is why we must prevent recalcitrant debtors like Orjiako, who are used to moving from one bank to another, with the deliberate intention of not repaying, from destroying the financial system.

Like Access Bank, it was understood that Zenith Bank is committed to taking all necessary measures within the framework (sic) of the law to collect this enormous debt ”.

However, in the stack opposite the claim, the results show that Dr. Orjiako had in fact paid the consortia a total of $ 143.3 million for the loans he guaranteed.

Furthermore, although these publications attempt to present the Shebah dispute with a consortium of banks as a new case and Dr. Orjiako as a debtor, the findings show that until the recent lawsuit brought by Zenith Bank last October, the case had been ongoing since 2014, from London to Nigerian courts. These are the loan facilities contracted by Shebah E&P to carry out a drilling campaign in OML 108, an inconclusive drilling campaign in the Ukpokiti oil field, off the Niger Delta.

Another striking finding is that Dr. Orjiako was never the borrower. He also did not use the said facilities as a person, as the banks disbursed the said loan directly to Shebah’s service providers. Instead, he was simply the majority shareholder of Shebah and the guarantor of the facilities. He was not even a member of Shebah’s management, but only vowed to save the business by making payments to banks, using his personal and family assets to attempt to liquidate the loan facilities as a guarantor. .

Origin and facts of the case

The findings and documents glimpsed show that the case began in 2012 when Shebah E&P secured a $ 150 million loan facility from a consortium of banks (AFREXIM / Diamond-now Access / Skye-now Polaris) led by AFREXIM for the works and the drilling campaign at the said Ukpokiti field (OML 108) operated by Shebah E&P.

Shebah successfully drilled a horizontal well, the first of its kind in the offshore Niger Delta, and tested 4,000 barrels per day of oil and condensate production, but encountered significant gas reserves. The company then decided to find a solution to the huge associated gas based on professional best practices from the oilfields before continuing with oil / condensate production. The company needed more funds to market the gas to avoid excessive flaring when producing the discovered oil.

However, the consortium of lenders led by AFREXIM was unable to provide Shebah with further loan facilities to complete the transactions, which is why Zenith Bank approached Shebah in 2014, assessed the situation and decided to provide a $ 250 million loan facility fully approved by its board of directors to save the day.

It is also instructive that Zenith Bank offered to pay the consortium of banks $ 50 million to reduce their collective exposure, increase the facility to $ 350 million, provide Shebah with additional funds to monetize the gas and produce the discovered oil. The improved facility would have allowed Zenith to join and lead the syndicate with $ 250 million, while the consortium of existing lenders would have reduced its exposure and remain at $ 100 million (roughly $ 33 million each).

In addition, Zenith Bank requested, based on Shebah’s needs, a 9-month moratorium to complete the projects and extend the duration of the facility to five years. This is in order to distribute the cash flow and allow easy repayment of the enhanced facility.

An insider, however, explained that the consortium led by AFREXIM surprisingly rejected the $ 50 million offered by Zenith Bank. They rejected Zenith Bank’s leadership of the syndicate and were unwilling to extend the term of the facility, which remained around two and a half years at the time Zenith Bank made the offer.

In preparation for the monetization of discovered gas, Shebah negotiated and executed a $ 2.5 billion Gas Sale and Purchase Agreement (GSPA) for 20 years of gas sales on a buy or pay basis. with the Nigerian Gas Company (NGC) as gas taker, backed by a $ 70 million bank payment guarantee from Zenith Bank.

However, the AFREXIM consortium rejected all efforts by Shebah and filed an action to call the facility in 2014, just two years after the facility’s final withdrawal. The call of the facility before maturity naturally triggered the default on the loan.

Documents obtained during the investigation showed that on February 19, 2016, Judge Phillips of the High Court in London rendered a judgment in favor of the AFREXIM consortium for the repayment of the $ 150 million facility. The judgment creditors registered the judgment with the Federal High Court in Lagos and requested enforcement of the judgment.

However, the defendants, Shebah, immediately objected to the registration and enforcement of the judgment on the basis of their beliefs on the rule of law and that they would like to negotiate an amicable settlement and repay the loan as part of a restructuring arrangement. This case is still pending before an honorable judge of the Federal High Court in Lagos as the court awaits the outcome of the settlement, which will be entered as a consent judgment.

But unlike the syndication agreement of the AFREXIM consortium, Polaris Bank transferred its share of the judgment facility to the Asset Management Corporation of Nigeria, AMCON. Notwithstanding the unilateral action of Polaris Bank, AMCON brought a new action in the Federal High Court in Abuja, regardless of the fact that the same case had already been decided in London and was the subject of enforcement proceedings challenged before the Federal High Court in Lagos. It was through this case that AMCON filed an ex-parte order granted and widely publicized in 2019.

Sincerity

Meanwhile, unlike accounts that place Dr Orjiako in the recalcitrant debtor category, the documents seen show that he paid $ 89.3 million out of a total of $ 150 million to the AMCON / AFREXIM / ACCESS consortium for loan repayment efforts. he guaranteed. That includes the $ 20 million he paid this year. Therefore, this means that if his proposal is accepted by these creditors, the outstanding principal amount would be $ 60.7 million.

The orthopedic surgeon turned businessman had also made a proposal to these creditors to accommodate Zenith Bank in the distribution of the repayment, but they did not accept this proposal. If they had joined, Zenith Bank’s action last October would have been prevented.

Nevertheless, in the case of Zenith Bank, Dr ABC Orjiako also repaid the sum of $ 54 million on a principal of $ 70 million. This payment includes the proceeds from the forced sale of its Seplat family shares by the Zenith bank. He is also currently urging the bank to negotiate an amicable settlement.

In total, he paid a total of $ 143.3 million (or $ 89.3 million plus $ 54 million). Analysts see these payments as clear proof of the high moral duty and righteousness on Dr. Orjiako’s part to repay a loan he has not personally used and for oil assets that generate no income.

Very reliable privileged sources have also confided that the parties could consider an amicable settlement of the trade dispute and that a positive outcome of such a settlement would definitively end the legal impasse.

The Seplat connection

Meanwhile, the findings further show that Seplat Energy, of which Dr Orjiako is the chairman, is not involved in any of these issues in any way. Seplat’s Board of Directors, very strong in terms of corporate governance, had effectively activated all governance and compliance processes and procedures to ensure that the company does not violate any aspect of regulatory compliance or its governance policies.

Likewise, it has been revealed that contrary to history in the public space, the recent resignation of Mr. Xavier Rolet as an independent non-executive director of the company had nothing to do with the recent Zenith trial. Bank and the resulting Marvera injunction.

“This case concerning Shebah dates back to 2014. So it is laughable for anyone to relate to Rolet’s resignation as he had indicated his decision to resign from the board for personal reasons several months ago,” an authoritative source familiar with the developments indicated.

The privileged source also called the attempt to highlight in the media the legal standoff between Access Bank and Seplat / Orjiako following Zenith’s recent lawsuit as mischief, describing it as part of the orchestrated campaign to tarnish Orjiako.

“This case is purely a loan deal gone awry between Access Bank and Cardinal Drilling Ltd. Cardinal Drilling obtained credit facilities from Diamond Bank (now Access Bank) to procure four drilling rigs between 2012 and 2014 . The loan was secured by fixed debenture deeds. Linked to the assets of Cardinal Drilling, namely the four specific platforms. Thus, it was against all legal principles and common sense that Access Bank decided to sue Seplat and Orjiako, who had absolutely nothing to do with the ease of lending as lessee or guarantor. No wonder the Court of Appeal rightly quashed the Access Bank injunction obtained from the lower court “, the source explained.

In these contexts, Nigerians and the international investment community watching the drama would like to ask: Is Dr ABC Orjiako really the kind of businessman his translators want the world to believe he is? The emerging facts point in the opposite direction.


Ikenna Peter is a business analyst. He writes from Abuja (Nigeria)


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