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Friday, March 15, 2019 08:47AM / By
Davidson Iriekpen of ThisDay / Header Image Credit: The Blue Diamond
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Federal High Court in Lagos has ordered O & O Networks Limited, a special
purpose vehicle owned by Ecobank Transnational Incorporated, to pay the sum of
N22.5billion, being proceeds of the wrongful sale of shares in Airtel Networks
Limited by Ecobank to Bharti Airtel, into the court’s account.
The
decision is a fallout from the long-standing legal dispute between Mr. Oba
Otudeko, a founding shareholder and former Chairman of Airtel Nigeria; his
company, Broad Communications Limited; another founding shareholder of the
company and O & O Networks now owned by Ecobank Transnational Incorporated.
Otudeko
and Broad Communications Limited had instituted a legal action in 2006
challenging Delta State Government’s acquisition of O & O network’s shares
in Airtel Networks (formerly Econet Wireless Nigeria).
From
the facts of the case, Broad Communication’s main contention is that the
transaction was unlawful and a breach of the Shareholders’ Agreement executed
by the shareholders of Airtel Networks.
According
to the said Shareholder’s Agreement, the shares should have been offered to the
existing shareholders first as their right of “First Refusal” (pre-emptive
right), as mandated by Clause 17.2.1 of the Shareholders’ Agreement, before
being offered to Delta State Government
Following
the institution of the suit, O & O Networks purportedly bought back the
disputed shares from Delta State Government.
Beneficial
ownership of the Airtel shares was subsequently transferred to Oceanic Bank,
which is now owned by Ecobank Transnational Incorporated.
In
2015, following information received that the disputed shares were being
offered for sale, Broad Communications published a “Buyer Beware” notice
advising interested parties of the existing dispute on the shares.
On
February 5, 2015, Justice John Tsoho of the Federal High Court also gave an
order restraining all parties from dealing or tampering with the shares in the
custody of Ecobank, and that all parties must maintain status quo until the
final determination of the suit.
However,
sometime in July 2018, and in disregard of the existing orders of the court, O
& O Networks/Ecobank, entered into an arrangement with Bharti Airtel, the
parent company of Airtel Networks, for the sale of the disputed shares to
Bharti Airtel for the sum of N22.5billion.
Further
findings revealed that as a condition of the sale transaction, Bharti Airtel,
being previously aware of the dispute and court orders on these shares,
extracted an indemnity from O & O Networks/Ecobank, the sellers of the
shares, against any exposure to any liability.
In a ruling
delivered on March 7, 2019, in respect of Broad Communication’s application
challenging the recent sale of shares to Bharti Airtel, Justice Mojisola
Olatoregun held that the order to maintain status quo earlier made by Justice
Tsoho on February 5, 2015 still subsists and that O & O Networks should
not have entered into the agreement with Bharti Airtel.
The
judge stated that this was tantamount to disobedience of a subsisting court
order and an affront to the court’s authority.
She
submitted that any sale of the disputed shares was done at the seller’s risk.
Consequent upon this, the judge ordered O & O Networks, owned by Ecobank
Transnational Incorporated, to pay the sum of N22.5billion being the proceeds
of the unlawful sale into the custody of the Federal High Court within seven
days from the date of the court ruling.
The
suit was adjourned to May 28, 2019 for continuation of hearing.
Credits
This post first appeared in ThisDay as Court Orders Ecobank to Forfeit N22.5bn over Airtel Shares (@THISDAYLIVE) tweeted at 7:17 am on Thu, Mar 14, 2019.
Visit Ecobank Transnational Incorporated Plc IR Page in Proshare MARKETS
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