A statement on a business deal between First Bank of Nigeria Limited (FirstBank) and General Hydrocarbons Limited (GHL) that is presently being litigated has been released by FirstBank to BrandSpur banking and finance news desk.
The bank clarified several online rumours by stating that it has faithfully fulfilled its responsibilities under the loan agreements. However, “FirstBank’s demand for good governance and transparency in the transaction, which GHL rejected” is the fundamental issue at the heart of the current conflict.
Remember that in a similar statement, GHL [General Hydrocarbons Limited] formally refuted allegations of a debt to First Bank of Nigeria (FBN) Limited.
According to the management, the business owes the bank nothing, not even the $225 million that has been claimed. GHL clarified that there was an ongoing restriction on commercial oil production by citing many agreements between it and FBN.
Furthermore, it claimed that a Federal High Court ruling had ruled in its favour and that FBN’s assertion of indebtedness, particularly in the media sector, was “misleading and malicious.” However, FirstBank refuted GHL’s assertions in the following ways: FirstBank will not be able to comment on matters that are pending court determination since they are sub-judice. This is because FirstBank is a responsible, law-abiding corporate citizen of Nigeria with the highest respect for the courts. We must, however, provide the following explanations to rectify the sponsored but inaccurate narratives on the subject that have been offered in certain media outlets.
“FirstBank, as the lender, and GHL, as the borrower, are involved in an ongoing business transaction in which FirstBank provided GHL with a number of credit facilities for the development of certain assets under an oil mining lease. These facilities are supported by extremely strong loan agreements that were signed by the parties and contain explicit terms on the security arrangement and the parties’ obligations.
“At the heart of the current conflict is FirstBank’s desire for good governance and openness in the transaction, which GHL rejected, even though FirstBank has faithfully fulfilled its commitments under the loan agreements. Following FirstBank’s discovery of GHL’s violations, including the diversion of proceeds, FirstBank asked that an impartial operator be chosen following the terms of the contract to manage the financed asset in a way that will increase project visibility, safeguard the interests of all parties involved, and add value. In addition to flatly rejecting this just and reasonable request, GHL also demanded that FirstBank provide additional funding for it.
GHL declined to fulfil the terms of the offer set forth by the Bank for further finance and instead initiated unnecessary arbitral proceedings.
“GHL issued a notice to initiate arbitration and has no substantive claim pending at the Federal High Court. GHL approached the Federal High Court solely to seek preservative orders pending arbitration. Some of the preservative orders sought by GHL were granted while others were denied.
It partly reads: “FirstBank is the only party that filed a substantive claim against GHL at the Federal High Court and the subject matter of FirstBank‘s claim is not identical with the dispute GHL submitted to arbitration because FirstBank’s claim is in respect of subsequent credit facilities granted to GHL and the offer letters and finance documents pertaining to the subsequent transactions clearly state that the disputes arising from the subsequent facilities are to be resolved by a court of competent jurisdiction in Nigeria and not by arbitration. Consequently, it is incorrect to assert that FirstBank abused the process of the court.
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“GHL off-took crude from the Floating Production Storage and Offloading (FPSO) vessel and diverted the proceeds. The Bank had no choice as a secured lender, under these circumstances of continued breaches, non-payment of due obligations and attempts to shield the Bank away from agreed security and repayment sources, than to approach the court for legal remedies, to preserve assets, recover the diverted proceeds, prevent reoccurrences and safeguard FirstBank’s interest. It is clear to us that the courts do not support or protect illegalities and breaches of contracts.
“FirstBank has a long and very rich history of supporting and providing for the financial needs of its customers over its more than 130 years of unbroken existence. FirstBank remains committed to ensuring that it continues to support the legitimate business aspirations of its teeming customers.
“At the same time, FirstBank is committed to the building of a strong credit culture where borrowers pay their debts when they borrow and will always take appropriate steps, within the ambit of the law, to resist attempts by borrowers to repudiate their repayment obligations.
“We wish to assure FirstBank’s numerous customers, stakeholders and the general public that FirstBank remains solid, calm, steadfast and unflinching in its resolve to continue to provide first-class services to its teeming customers within and outside the country.
“FirstBank also wishes to respectfully thank our shareholders for the indicatively oversubscribed Rights Issue of its parent company, First Holdco Plc (“FirstHoldco”), in the first round of its capital raise and looks forward to an equally successful final leg of the recapitalization exercise when it is announced by FirstHoldco,” it added.
