Access Bank vs AP: Legal battle begins today
African Petroleum (AP) Plc’s shareholders’ attention will be divided today at the company’s 30th annual general meeting holding at the Civic Centre, Ozumba Mbadiwe, Victoria Island, Lagos.
Less than a kilometre away on the other side of the lagoon, at Court 25 of the Federal High Court in Ikoyi, legal fireworks in the motion filed by Access Bank Plc, seeking the winding up of the 45 year-old oil marketing giant will begin.
The bank had instituted the legal action over a $35.154 million (about N5.6 billion) facility it granted AP, last year.
Already, Access Bank has asked AP’s shareholders and creditors to be present in court to indicate their interest in the matter as it would leave no stone unturned until it convinces the court to take over the company for its inability to refund the $35 million facility.
The shareholders are expected to either support or oppose the order winding up the company should the scale of justice tilt against AP.
“Any creditor or contributory of the said company (AP) desirous to support or oppose the making of an order on the said petition may appear at the time of hearing in person or by his counsel for that purpose and a copy of the petition will be furnished by the undersigned to any creditor or contributory of the said company requiring such copy on payment of the regulated charge for the same,’’ Access Bank, in a statement signed by Olisa Agbakoba (SAN), its lawyer, said.
AP’s shareholders and creditors’ right of audience in today’s hearing appears tall as the hurdles and requirements posed before them by Access Bank may be difficult to fulfil.
Reason : Their intention and interest must get to Access Bank not later than 48 hours before the hearing of the winding up motion commences in court as enshrined under sections 408,409 and 410 of the Company and Allied Matters Act Cap C.20.
An official gazette as ordered by the court and published by Access Bank yesterday reads: ‘’Any person who intends to appear at the hearing of the said petition must serve on or send by post a notice of intention to do so. The notice must state the name and address of the person or if a firm, the name and address of the firm and must be signed by the person or firm or his or their solicitor (if any) and must be served or if posted, must be sent by post in sufficient time to reach Access Bank lawyers not later than 48 working hours before the date the petition is for mention in court’’.
But the management of AP yesterday assured its creditors and investors that there was no cause for alarm.
In a statement, AP said the company “is a strong, vibrant company with experienced Management and Board and definitely not insolvent. The action of Access Bank Plc is about a disputed debt arising from a facility granted by Access Bank to AP for the purpose of opening Letters of Credit (LC) for the importation of refined petroleum products. Upon maturity of the LC, Access Bank debited AP Plc at the converted rate of N127 to one US Dollar. This was as at 2nd December 2008.
“AP immediately protested the rate of the exchange applied by Access Bank, pointing out to them that the Central Bank of Nigeria (CBN) spot rate on 30th of November, 2008 which was the maturity date of the LC was N116.62 to one US dollar and even the black market rate was between N119 and N122 to one US dollar at that time. However, we stated our willingness to pay but at the appropriate rate via our letter dated December 2, 2008 (Letter attached as Exhibit 2)
“Several correspondences have been exchanged in a bid to amicably resolve this matter but were unsuccessful. AP Plc then further petitioned the Central Bank of Nigeria (CBN) by letter dated May 15 2009( attached as Exhibit 3) to adjudicate on this matter. CBN’s decision was being awaited when Access Bank filed this suit. Our lawyers have since filed appropriate papers in court as this is definitely not a case for winding up.
“It is also important to note that Access Bank was one of the Issuing Houses and Underwriter to AP’s 2008 Public Offer/Rights Issue. Access Bank’s underwriting commitment is N4,825,956,000.00 and up to date, has reneged on meeting its underwriting obligation to AP Plc. The Securities and Exchange Commission has since suspended Access Bank Plc from all Capital Market transactions until this obligation is met accordingly.
“Aside from this, African Petroleum Plc has credit balance in the following account in the same Access Bank presently; Current Account: N1,391,821,338.00Cr - (A/C No: 0140010040312); DPK Collection Account: N 114,153,831.00Cr -( A/C No: 0140160002017); Domiciliary Account: $1,116,454.00 Cr- ( A/C No: 0141010016150)
“To further buttress the fact that AP is a healthy vibrant company, AP’s fundamentals are quite impressive as in 2008, our turnover is N162,595,515,000.00, Profit before Tax N7,147,752,000 and Profit after Tax of N5,103,115,000.00.
“We assure you our esteemed creditors, investors and stakeholders that we are waxing stronger everyday and are very solvent. The management will always protect the investors and stakeholders of AP and not allow any bank take away over N400m that is not due to them.”
But Access Bank yesterday insisted that the rate of N127.3610 to a dollar which it offered AP to repay the loan was in tune with the market at the Central Bank of Nigeria rate as at December 3, 2008 when it was due.
The CBN had on June 2, 2009 asked Access Bank to state its side in a letter of protest forwarded by AP on the foreign exchange transaction between them.
Responding to the letter on June 10, Access Bank said as of the date of the transaction (1st December 2008), the Foreign Exchange regime in operation was the Wholesale Dutch Auction System under whose guidelines Authorised Dealers bought and sold Forex, both inter-bank including the CBN as well as with end users.
“In line with our view of the direction of rates in the market during that period, we offered to sell foreign exchange to AP at the rate of N127/USD to cover their outstanding and unpaid USD facility exposure of $35,153,822.15 and in line with the term of their offer letter, we debited their current account with the naira equivalent.
“We were shocked that despite the fact that this rate was favourable to AP, they rejected our offer and demanded that we reverse the debit to their account vide their letter dated 2nd December, 2008.
“AP rejected this rate, following which the bank had to reverse the transaction with a request for the company to make the sum of $35,153,822.15 immediately available to the bank to meet the obligation.”
Yesterday, it was gathered that the CBN has set up a committee to look into disputes between the two quoted companies.
A top official of the apex bank who spoke to the Nigerian Compass said a special committee handling the issue was carrying out the assignment just like a court, and until it comes out with a verdict, it would be wrong to make any other comment.
He assured that the issue was being handled appropriately.
Also yesterday, AP filed a notice of preminary objection against Access Bank’s motion.
In the notice signed by O.A. Olasewere, on behalf of its lawyers, AP said that the Access Bank motion dated 25th June, 2009 should be dismissed in limine because it did not disclose “any ground under the recognised heads for winding up a company under the Companies and Allied Matters Act CAP C20 Laws of the Federation of Nigeria 200”.
Besides, it said “ the subject matter of this suit constitutes an abuse of the processes of this Honourable Court”, adding “the applicant lacks locus standi to file a winding up petition against the respondent”.