"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 ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â€šÂ¬Ã…Â¡Ãƒâ€šÃ‚Â¦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 LC was established and booked on 18th of July 2008 and matured on December 1, 2008," 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.
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.