Emerging facts about the Orjiako loan saga
Through Hauwa Hazan Baba
a American business mogul, investor and philanthropist Warren Edward Buffett said in one of his famous quotes: “Wall Street is the only place people go in Rolls Royces for advice from those who take the subway. “.
Recently there have been several publications in the media regarding the loan facilities taken by Shebah E&P Limited to carry out a drilling campaign in OML 108. These cases were before several courts between London and Nigeria from 2014 until the latest initiated by Zenith Bank in October 2021. All these cases are linked to the inconclusive drilling campaign in the Ukpokiti oil field, off the Niger Delta.
The origin of the who hubbub
As Buffett said, “What we learn from history is that people don’t learn from history.” The origin of the case is that in 2012, Shebah E and P secured a loan facility of $ 150 million from a consortium of banks (AFREXIM / Diamond-now Access / Skye-now Polaris) led by AFREXIM. The installation was intended for the finishing works and the drilling campaign of the Ukpokiti field (OML 108) operated by Shebah E&P.
Incidentally, all of these cases received a lot of media attention and each time an individual was repeatedly mentioned as being the debtor of these establishments.
That person is ABC Orjiako, an orthopedic surgeon, who is also the co-founder and chairman of Seplat Energy Plc. It is therefore incumbent on any investigative journalist to carry out an independent analysis of these debts and associated court cases to reveal the facts underlying all the stories and whether Dr ABC Orjiako is “guilty according to the charge”.
It is relevant to state that this current frenzy on the issue of loans is not a new case but the same case that has been reported variously in the media since 2016.
Never a borrower and never used the facilities as a person
The most amazing fact in all of this is that Dr Orjiako was never a borrower and never used the facilities as a person. He was only the majority shareholder of Shebah and guarantor of the facilities. Dr Orjiako was not even a member of Shebah’s management but rallied to save the business by making payments to banks using personal and family assets to liquidate the facilities. The banks disbursed the loan directly to the company’s service providers.
Listen to this
Shebah successfully drilled a horizontal well, the first of its kind in the offshore Niger Delta, and tested 4,000 barrels per day of oil and condensate production, but encountered significant gas reserves. The company then decided to find a solution to the huge associated gas based on professional best practices from the oilfields before continuing with oil / condensate production. The company needed more funds to market the gas to avoid excessive flaring when producing the discovered oil.
AFREXIM led a consortium of lenders
It should be noted that the consortium of lenders led by AFREXIM was unable to provide Shebah with further facilities to complete the transactions. In 2014, Shebah then approached Zenith Bank, who assessed the situation and provided a $ 250 million loan facility fully approved by its board of directors to save the day. Zenith offered to pay the consortium of banks $ 50 million to reduce their collective exposure, increase the facility to $ 350 million, provide Shebah with additional funds to monetize the gas and produce the discovered oil. The improved facility would have allowed Zenith to join and lead the syndicate with $ 250 million, while the consortium of existing lenders would have reduced its exposure and remain at $ 100 million (roughly $ 33 million each).
Zenith calls for a 9-month moratorium
Zenith further requested (in line with Shebah’s needs) to have a 9-month moratorium period to complete the projects and extend the duration of the installation to 5 years. This was intended to spread the cash flow and facilitate repayment of the enhanced facility.
Surprisingly, the AFREXIM consortium rejected the $ 50 million offered by Zenith on the grounds that Zenith should not lead the union and that it was unwilling to extend the duration of the installation which remained about two and a half years in the time of Zenith’s offer.
In preparation for the monetization of the discovered gas, Shebah negotiated and executed a $ 2.5 billion GSPA for 20 years of gas sales on a take-or-pay basis with the Nigerian Gas Company (NGC) as a gas purchaser backed by a bank guarantee of payment in the amount of $ 70. million from Zenith Bank.
The AFREXIM consortium rejected all efforts by Shebah and filed an action to call the facility in 2014 (just two years after the final draw). The pre-maturity facility call triggered the default of the loan.
Judge Phillips of the London High Court judgment
On February 19, 2016, Judge Phillips of the High Court of London rendered a judgment in favor of the AFREXIM consortium for the repayment of the $ 150 million loan facility. The judgment creditors then registered the judgment with the Federal High Court in Lagos and sought enforcement of the judgment.
The defendants immediately objected to the registration and enforcement of the judgment based on their belief in the rule of law and the fact that they would like to negotiate an amicable settlement and repay the loan under of a restructured agreement. This case is still alive before an honorable judge of the Federal High Court in Lagos. The court is awaiting the outcome of the settlement which will be entered as a consent judgment. Contrary to the syndication agreement of the AFREXIM consortium, the Polaris bank transferred its share of the judgment facility to AMCON. Despite Polaris Bank’s unilateral action, AMCON filed a new lawsuit in the Federal High Court in Abuja, regardless of the fact that the same case had already been adjudicated in London and was underway. subject of enforcement proceedings challenged before the Federal High Court in Lagos. It was through the file that AMCON filed that an ex-parte order was granted in 2019, which was widely reported in the press.
See what Orjiako paid
See what Orjiako paid
Buffett’s saying goes that “if past history was all that was needed to play the money game, the wealthiest people would be librarians.” Orjiako paid the following amounts to the lenders: $ 89.3 million (out of a total capital of $ 150 million) including $ 20 million paid this year to the AMCON / AFREXIM / ACCESS consortium for repayment efforts. This means that if his proposal is accepted by these creditors, the principal amount overdue would be $ 60.7 million. He had made a proposal to these creditors to accommodate Zenith bank in the repayment distribution, but they did not accept this proposal, which would have prevented the action of Zenith bank from October 2021.
In the case of Zenith Bank, ABC Orjiako also repaid $ 54 million (including the proceeds from the forced sale of shares in its Seplat family by Zenith Bank) on the principal of $ 70 million and is currently committing the bank to negotiate. an amicable settlement. . This means that Dr. Orjiako paid a total sum of $ 143.3 million ($ 89.3 million plus $ 54 million).
Why the false statements of fact
Most of the stories recently read on this issue have unfortunately been used to distort the facts as they have portrayed an innocent person in a very bad light with enormous damage to reputation.
It is important to note that this kind of misrepresentation misleads the global investment community with its negative consequences for Nigeria. It should be remembered that Dr Orjiako continued to lead Seplat Energy towards its exponential growth, achieving the enviable position of an independent Nigerian energy company listed on the London Stock Exchange and the Nigerian Stock Exchange, among many other achievements.
Payments clearly show high moral duty and integrity
These payments are clear evidence of high moral duty and integrity to repay a loan that Dr. Orjiako did not use and for oil assets that generate no income. From the deluge of negative media reports, most of which misrepresent the matter, there is a strong sense that these are smear campaigns.
It was also revealed that SEPLAT, of which Dr ABC Orjiako is the chairman, is not involved in any of these issues, contrary to nuances in the media report. As SEPLAT’s board of directors being very strong in corporate governance, had activated all governance and compliance processes and procedures to ensure that there were no violations of any aspect of regulatory compliance or of its governance policies.
Amicable settlement in the offer
There is also information that the parties may be considering an amicable settlement of the trade dispute. The positive outcome of such a settlement will definitely put an end to the impasse.
In a completely different case, Access Bank v Cardinal Drilling, ABC Orjiako unfortunately had the misfortune of being blamed for Cardinal’s installation because he is seen as the alter ego of the business.
Dr. Orjiako’s involvement was made as an investor in Cardinal where his company Shebah invested alongside Platform Petroleum and Maurel and Prom, all founding shareholders of Seplat. Neither Orjiako nor the other shareholders have ever received a dividend from Cardinal. All equity investments were lost but again, oddly enough, only Orjiako was selected for the smear campaign.
• Miss Hauwa Hazan-Baba (BSc Econ, MSc Management) is an economist and public affairs analyst based in the United States.