Thursday, December 03, 2020 / 12: 04 PM / Comments off SEPLAT Release/ Header Image Credit: Seplat Petroleum
Over the week, the Corporate Headquarters of Seplat Petroleum Development Company Plc (SEPLAT) at No. 16A Temple Road, Ikoyi, Lagos was sealed by policemen on Wednesday, December 2, 2020, ostensibly on behalf of a Receiver/Manager appointed by one of Nigeria's tier-1 lending institutions, Access Bank Nigeria Plc. According to a manager at the company, the sealing order prevented the company's staff and other tenants from accessing the building.
Routine enquiries concerning the sealing suggest that SEPLAT received copies of legal documents which included the following: a letter dated 2nd December 2020 from Messrs Kunle Ogunba & Associates, stating that they had been appointed as the Receiver/Manager of the building; Court documents filed by Access Bank against SEPLAT, Cardinal and other named Defendants.
SEPLAT's Corporate Headquarters was believed to have been sealed within the week in line with an ex parte Court Order dated 13th November 2020, which was obtained in favour of Access Bank Plc in connection with a Loan Facility the bank granted to Cardinal Drilling Services Limited.
The Meat of The Matter
Investigations also revealed that in 2012, Cardinal Drilling Services Limited obtained a Facility from Diamond Bank (now Access Bank) to purchase the CDS Rigs 101, 201, 202, and 203. The Facility was secured by a fixed and floating Debenture over Cardinal's assets (the "Debenture").
Managers at SEPLAT say the company was not a party to the Facility or the Debenture and did not provide any guarantees or indemnities on behalf of Cardinal or otherwise in connection with the Facility.
It was understood that Cardinal Rigs were used to provide drilling services to SEPLAT and other companies. CDS 101 and 201 were used to execute SEPLAT's 2019 work programme and all 4 Rigs were critical to SEPLAT's future drilling plans.
With time, it was understood that Cardinal was unable to service the outstanding part of the Facility, which Access Bank showed to be an outstanding debt of US$85.8m.
It was learned that Cardinal and Access Bank had on the 15th January 2019, agreed on a settlement of $45 Million, to be paid in two (2) installments by 31st December 2019.
On the 25th of April 2019, Cardinal failed to pay the 1st tranche of the settlement amount (i.e., $30 Million), which was due on or before the 18th of April 2019.
SEPLAT's Supply Chain Intervention
Given the importance of the Cardinal Rigs to SEPLAT's operations, SEPLAT supported discussions between Cardinal and Access Bank to resolve Cardinal's indebtedness and Access Bank's proposed foreclosure on the Rigs.
To date, managers at SEPLAT insist that the company has not made any binding commitment to Access Bank in connection with Cardinal's indebtedness.
Indeed, SEPLAT claims to have merely sought to support settlement discussions between Cardinal and Access Bank, to retain its continued use of the Cardinal Rigs in ongoing operations which was, therefore, basically a vertical supply chain protection strategy.
Following Cardinal's increasing indebtedness and failure to pay the agreed settlement, Access Bank joined SEPLAT in its remedial action strategy to recover its loan from Cardinal.
According to available information Cardinal, in its response to Access Bank, noted that it was in discussions with SEPLAT on possible funding support.
Cardinal's Deadly Debt Migraine
Clause 6 of the Deed of Debenture on the loan facility granted to Cardinal allowed Access Bank the right to appoint a Receiver/Manager over the company's assets if Cardinal failed to liquidate the Facility. On 12th October 2020, Access Bank appointed Kunle Ogunba & Associates to act as the Receiver/Manager.
On 13th November 2020, Access Bank filed a Court action against SEPLAT; Cardinal; a Seplat Director; and a Cardinal Director (the "Defendants").
According to court proceedings, Access Bank asked the Court grant the following prayers: validate the appointment of Kunle Ogunba & Associates as the Receiver/Manager; validate the Receiver/Manager's authority to take possession of the 4 Cardinal Rigs and other assets of persons and companies presumably connected to Cardinal drilling; restrain all Defendants from disposing or dealing with the Assets; declare that the Defendants have no right to enter into, or deal with, any of the Assets.
A call to an officer at SEPLAT, who requested for anonymity as he was not authorized to speak on the matter, confirmed that the company's office was sealed without prior notice. He noted that the official legal counsel of the company had observed that the sealing of the Temple Road office of the upstream Oil and Gas company may have been in violation of the rights of the owner and other tenants who were allegedly unduly prevented from accessing the building.
The officer further noted that the Temple Office was not one of SEPLAT's assets, as SEPLAT was merely a tenant in the building. He believed that any court order on SEPLAT's assets did not extend to the Temple Road premises of the company.
Related Links to Release
1. Seplat twitter Seplatpetroleum status on temple Road
2. Seplat PressReleases
3. Seplat website
4. Seplat's Corporate Disclosure on the NSE
In the light of the claims made above and the information available from financial returns/reports; we are looking at and will report on the governance/related party relationship between Seplat PLc and Cardinal Drilling Nigeria.
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