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AMCON/SHEBAH E & P MATTER- The Underlying Facts.

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AMCON/SHEBAH E & P MATTER- The Underlying Facts.

AMCON/SHEBAH E & P MATTER- The Underlying Facts.
August 31
08:21 2019
Following the recent media publications  in relation to an interim( Ex-Parte) order  obtained by AMCON to appoint a receiver for Shebah E&P( 1st Defendant) assets and to enter Dr ABC Orjiako’s ( 2nd Defendant) properties, as well as Allene BVI Ltd, our investigation based on publicly available information in Nigeria and the UK revealed that  there were misrepresentations in the application for the interim orders as well as in the publications.  Some of  these misrepresentations and unfolding facts are captured and outlined as follows-
• The origin of the matter is that in 2012 Shebah E and P obtained a $150m loan facility from a consortium of banks( AFREXIM/Diamond- now Access/Skye- now Polaris) led by AFREXIM. The facility was meant for work over and drilling campaign at the Ukpokiti field (oml 108) operated by Shebah E&P.
Shebah drilled a successful horizontal well, the first of its kind in the offshore Niger Delta and tested 4000 barrels per day of oil and condensate production but encountered large gas reserves. The company then decided to find a solution to the huge Associatd gas based on professional oil field best practices before continuation of the oil/ condensate production. The company required more funds to commercialize the gas to avoid excessive flaring while producing the discovered oil.
•The AFREXIM led consortium of lenders, could not provide further facilities to Shebah to conclude the operations. In 2014, Shebah then approached Zenith Bank , which appraised the situation and provided a $200million loan  facility fully approved by its board to salvage the situation. Zeneth proposed to pay the consortium of banks $50m to reduce their collective exposure, enhance  the facility to $300m, provide Shebah with additional funds to monetize the gas and produce the discovered oil. The enhanced facility would have had Zenith join and lead the syndicate with $200m, while the consortium of existing lenders would have reduced their exposure and stay at $100m( about $33m each).
Zenith further requested (in line with Shebah’s need) to have a moratorium period of 9 months to conclude the projects and extend the facility tenure to 5 years. This was meant to spread the cash flow and enable easy repayment of the enhanced facility.
•Surprisingly, the AFREXIM consortium rejected the $50m offered by Zenith on the grounds that Zenith should not lead the syndicate and they were not willing to extend the tenure of the facility which was remaining about two and half years as at the time of Zenith’s offer.
•Preparatory To monetizing the discovered gas, Shebah negotiated and executed a GSPA of $2.5billion for 20 years gas sale on a take or pay basis with the Nigerian Gas Company(NGC) as the gas offtaker supported by a payment bank guarantee in the sum of $70m from Zenith bank.
• The AFREXIM consortium rejected all the efforts being made by Shebah and proceeded to file an action to call the facility in 2014( just two years after final draw down). The call of facilty ahead of the maturity triggered the default on the loan.
•On 19 February 2016, Mr Justice Phillips of the London High Court delivered a judgement in favor of the AFREXIM consortium for the repayment of the $150M loan facility. The judgement creditors then registered the judgement in Federal High Court in Lagos and applied for enforcement of the judgement. The defendants, immediately opposed the registration and the enforcement of the judgement based on their convictions on rule of law and on the fact that they would like to negotiate an out of court settlement and pay back the loan under a restructured arrangement. This case is still life before an Honorable Justice of the Federal High Court Lagos. The next hearing date is in October, 2019.
• Contrary to the Syndication agreement by the AFREXIM consortium, Polaris bank unilaterally transferred its share of the judgement facility to AMCON. Not withstanding the unilateral action by Polaris bank, AMCON should have joined the existing court case in the Federal High Court Lagos but instead it initiated a fresh action in Federal High Court  Abuja, not minding that the same case  ha  already got a ruling in London and subject to a contested enforcement proceedings in the Federal High Court Lagos.
It is by the fresh case that AMCON obtained the Ex-Parte order which was reported recently in the press.
• It is pertinent to state that our investigation revealed  that this is not a fresh case but the same case that has been reported variously in the media since last year.
• All efforts to reach Shebah and other defendants failed but it is believed that Shebah will appeal the interim order.
• It was also revealed that  Dr Orjiako who was the loan guarantor had provided about $68Million to  Shebah to pay the AFREXIM consortium toward the repayment efforts
• our investigations also revealed that the order listed several assets not owned by Shebah or ABC Orjiako which gives a strong impression that this is a smear campaign.
• It was also revealed that SEPLAT where Dr ABC Orjiako is the Chaiman is not involved in this matter what so ever contrary to the nuances in the media report. The SEPLAT board of directors being very strong in corporate governance had activated all governance and compliance processes and procedures to ensure that there are no breaches of any aspect of regulatory compliance or its governance policies. The company being a regulated entity will await the outcome of the judicial processes and will be guided accordingly whenever the cases in court are finalized.
• our investigation also revealed that the mentioning in the media of Platform petroleum is rather curious as there is no evidence that this company is related to Shebah, Allenne or Dr Orjiako.
• There is information also that the parties maybe considering out of Court settlement of the commercial dispute. A positive outcome of such a settlement will bring the entire impasse to a final close.
• Conclusion – This is an interesting case that is testing cross boarder laws and litigation  collaboration and judgement enforcements. It will also test the new AMCON act and its far reaching powers, vis a vis human  rights the citizenry as well as the sanctity of the Nigeria/internal  Corporate laws.

 

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