By Majeed Dahiru
The peace and tranquillity of the corporate world was recently rattled by the news that a Nigerian court had granted an injunction allowing Nigeria’s biggest lender, Access Bank to seal up the headquarters of Seplat Petroleum Development Company, a leading and indigenous player in Nigeria’s Oil and Gas industry in the on-going legal battle over the recovery of a debt of $ 85.8 million. In a swift execution of the court injunction obtained by Access Bank, it’s appointed Receiver/Manager, Kunle Ogunba & Associates immediately sealed up the Temple Road Ikoyi rented headquarters of Seplat Petroleum, one of Nigeria’s biggest export brands with a global reputation for corporate integrity and quality service delivery. The property also serves as offices of other international brands.
However, a close scrutiny of some of the issues emanating from the legal battle being waged by Access Bank, which is aimed at debt recovery reveals another corporate entity known as Cardinal Drilling Services Nigeria Limited as the borrower and not Seplat Petroleum. Cardinal Drilling Services Limited had consummated a loan transaction with Diamond Bank in 2012, eight years before the bank was acquired by Access Bank in 2020 to finance its acquisition four oil drilling rigs. And in line with its well-known reputation for aggressive debt recovery drive, Access Bank is going after the defaulting debtors of the defunct Diamond Bank, among who is Cardinal Drilling Services Nigeria Limited. The only problem in this case is that by going after Seplat Petroleum, even suing it as the 1st Defendant, to recover a debt owed by Cardinal Drilling Services Nigeria Limited, Access Bank may have gone on an overdrive and overshot the runway in its bid to recover its debt of $85.8 million legacy debt.
In addition to the fact that Seplat Petroleum was not the borrower, the company did not also guarantee the loan for Cardinal Drilling Services Nigeria limited. A statement issued by Seplat Petroleum and signed by the company’s Secretary and General Counsel, Mrs Edith Onwuchekwa, to this effect clearly stated thus;‘’We understand that Cardinal Drilling has outstanding loan obligations to Access Bank. However, Seplat is neither a shareholder in Cardinal Drilling nor has outstanding loan obligations or guarantees to Access Bank and did not at any time make any commitments or guarantees in respect of Cardinal Drilling’s loan obligations to Access Bank’’.
The facility was secured under the terms of a Fixed Debenture (not even Floating Debenture) over Cardinal’s assets. And when Cardinal Drilling defaulted on its loan repayment to Access Bank, it would have been within the lender’s right to go after the borrowers assets. But in this case, the lender went after the assets of a corporate entity that was neither the borrower nor the loan guarantor by relying on the only linkage between Seplat Petroleum and Cardinal Drilling; Dr Ambrosie Bryant Chukwueloka Orjiako, an accomplished orthopaedic surgeon turned oil magnate and the fact that Cardinal does drilling works for Seplat.
Described by Forbes Magazine as ‘’a silent and high achieving Nigerian billionaire’’, Dr ABC Orjiako who is the co-founder and chairman of Seplat Petroleum since 2009. In his individual capacity as a private investor, Dr Orjiako along with an international consortium, holds equity in Cardinal Drilling Services Limited. Relying on the link between Dr Orjiako in his individual capacities as Chairman of Seplat petroleum and stakeholder in Cardinal Drilling to go after the assets of a different entity by Access bank is nothing short of a misdirected corporate aggression; a misdirected corporate aggression at one Nigeria’s corporate success stories with grave consequences for Nigeria’s business environment and economy in general.
In just over a decade after it made its entry into the oil and gas sector of the Nigerian economy, Seplat Petroleum has steadily grown into a leading oil company with a strong reputation for high standards, corporate ethics, innovative and quality service delivery. Seplat Petroleum will eventually emerge a global player in the oil and gas industry when it emerged ahead of others, as the first Nigerian company to be listed on both the Nigerian Stock Exchange [NSE] and the London Stock Exchange [LSE]. Seplat’s Initial Public Offering [IPO] on the London Stock Exchange raised a record $535 million, a demonstration of international investors’ confidence on the company’s stocks. It currently commands a market capitalisation of about $458 million and assets worth over $2.8 billion.
The Chairman of Seplat, Dr Orjiako is also one of the three Nigerian on the Africa Advisory Group of the London Stock Exchange, a huge endorsement of his integrity. For a Nigerian economy that is in dire need of overseas investment opportunities for its homegrown business, Seplat Petroleum leads the way.
Since it took a plunge into the difficult terrain of the upstream sector of Nigeria’s oil and gas industry, Seplat Petroleum has managed to establish itself as a major player in a sector that is dominated by International Oil Companies. From its first acquisitions of OMLs 4, 38 and 41 in 2010, Seplat has grown the capacity of its oil production from 14,000 bpd to about 84, 000 bpd by the end of 2018.
In addition to oil production, Seplat is a major supplier of gas for industrial and domestic utilization in Nigeria. Seplat Petroleum currently supplies gas to Azura, Geregu and Sapele power plants with combined generation capacities of over 1000 megawatts of electricity. Through the Nigerian Gas Marketing Company [NGMC], Seplat Petroleum supplies gas to a number of factories for their independent power generation.
The sealing up of the headquarters of Seplat Petroleum on the order of the Federal High Court as well as the order stopping banks from fulfilling their obligation towards the company under banks-customer relations, were avoidable actions capable of disrupting the enormous business activities of a leading oil and gas conglomerate. Fortunately, respite came the way of Seplat Petroleum with the suspension of the interim order of the Federal High Court by a the Court of Appeal, Lagos Division pending the determination of the substantive appeal filed by the company challenging Access Bank’s misdirected corporate aggression.
In arriving at its decision, the Appeal Court said: ‘’The Supreme Court has held that where machines and workers would be rendered useless, the court would intervene. Disruption of business should be considered in the issue of balance of convenience. The court will exercise its discretion in suspending the injunction’’.
Now that Seplat petroleum, a company of nearly 500 employees that has expended over $71 million in various community development projects as parts of its Corporate Social Responsibilities has been granted momentary respite by the Court of Appeal, job losses will be prevented and industries saved from collapse. This will also afford Seplat Petroleum the opportunity to concentrate on its $700million gas project in Asaa, Ohaji/Egbema local government area of Imo state. This Gas project, which is a 50:50 Joint Venture between Seplat Petroleum and Nigeria Gas Company [NGC] is estimated to produce 300 MMscfd and therefore a major boost to the federal government’s diversification drive that will boost domestic gas production, create jobs and revenue for government.