The National Council on Privatization (NCP) has approved the termination of the offer to purchase 77.5 percent of Aluminum Smelter Company of Nigeria (ALSCON) by BFI Group Corporation following their inability to pay the agreed 10 percent of the offer price within 15 working days of the execution of the Share/Sales Purchase Agreement (SPA) as directed by the Supreme Court of Nigeria.
The deadline for the execution of the SPA and payment of the 10% of the offer price elapsed at midnight Nigerian time on the 18th day of March 2013 and as at that deadline date, the BFIG had neither executed the SPA nor made the initial mandatory 10 percent of the bid amount.
The Supreme Court of Nigeria, in a July 6, 2012 judgment awarded ALSCON, located in Ikot-Abasi, Akwa-Ibom State, Nigeria, to BFIG Corporation.
In compliance with that judgment, the Bureau of Public Enterprises (BPE), as a responsible and a law abiding government agency, transmitted an offer letter and the Share Sales/Purchase Agreement (SPA) in respect of ALSCON to BFIG. This followed the directive of the National Council on Privatization (NCP) chaired by the Vice President, Architect Mohammed Namadi Sambo, which met at the Presidential Villa, Abuja on January 22, 2013.
BFIG, the plaintiffs in the suit at the Supreme Court, was expected to execute the Share Sales/Purchase Agreement (SPA) and pay the agreed 10 % of the offer price of $410 million (which is $41 million) within 15 days of the execution of the SPA as directed by the Supreme Court.
The BFIG, in total disregard of the apex court, drafted and executed an agreement that was different from the one ordered by the Supreme Court.
It would be recalled that Nigeria’s apex court had stated among other decisions that:
“an order of specific performance is hereby decreed mandating the respondent to provide
the mutually agreed share purchase agreement for execution by the parties to enable the plaintiff pay the agreed 10% of the accepted bid price of US $410 million (i.e, the sum of US $41 million) within 15 working days from the date of the execution of the Share Purchase Agreement in accordance with agreement dated 20/5/2004 and the 90% balance of bid price shall be paid within 90 calendar days.
”It is declared that the defendant is bound to accept payment of 10% of the bid price from the appellant (BFI Group Corporation) within 15 days from the date of signing the share Purchase Agreement (SPA) by the parties.”
Recall that the financial bid opening for the privatization of ALSCON was held on June 14, 2004 and BFIG emerged the preferred bidder with a bid offer of $410 million subject to the approval of the National Council on Privatization (NCP.)
The Federal Government approved their bid and on June 17, 2004, the Bureau of Public Enterprises (BPE), conveyed the approval of the Federal Government to BFIG Group.
In the letter, BFI Group was unequivocally informed that they had 15 working days from the date of receipt to pay 10% of the bid price. BFI Group received the letter on the same date, that is, June 17, 2004. Negotiation for the execution of the Share Sale/Purchase Agreement (SPA) was scheduled for June 18, 2004. However, at the instance of BFI Group it was postponed to June 21, 2004.
Negotiations were subsequently held between officials of the BPE and BFI Group where a final agreement was reached but BFI Group was not available to sign the SPA. The 15 working days expired by 12 midnight of July 8, 2004, but on Thursday, June 8, 2004, BFI Group applied for 10 working days extension to enable them pay up the 10% of the bid price. BPE forwarded the request to the government. The government however turned down the application.
The BFI Group subsequently sued the BPE at the Federal High Court, Abuja challenging the decision of the BPE to cancel its status as the preferred bidder.
It is important to state for the records that every step the Bureau of Public Enterprises had taken in this matter, it had relied on the Supreme Court judgment, including the price and the timeline were set by the Supreme Court and the BPE as a responsible agency has complied every step of the way.