Ecobank Demands Rejection of FBN Holdings Acquisition Over Alleged Unsettled Debt

Ecobank Nigeria Limited has called for the rejection of the recent acquisition of FBN Holdings shares by an entity associated with Oba Otudeko, the former chairman of the banking group.

The demand stems from an alleged unsettled debt of N13.5 billion Otudeko owed Ecobank Nigeria Limited.

Kunle Ogunba, Ecobank’s lawyer, accused Otudeko of diverting assets belonging to both himself and the Honeywell Group of Companies through Barbican Capital Limited in other frustrate the enforcement of a Supreme Court judgment against him and the Honeywell companies.

This development follows Otudeko’s comeback, wherein he acquired a 13.3 percent stake in FBN Holdings by purchasing 4.7 billion shares valued at N87.8 billion through Barbican.

In the letter dated July 7, 2023, Ecobank’s lawyer asserted, “We, therefore, demand that you respectfully reject the approval/consent/registration/ratification [of] the shares bought by the said Barbican Capital Limited held via the afforested entities, as proceeding with such approval/registration will be tantamount to assisting in the diversion of funds/assets meant for the payment of the debt which has been affirmed by the Supreme Court.”

The letter further demanded that FBN Holdings provide details regarding the status of the transaction within seven days.

Ecobank emphasized that as a responsible corporate entity, FBN Holdings should not take any action that might be construed as encouraging the subversion or violation of the Supreme Court’s judgment, which mandates the Honeywell companies to repay their outstanding debt.

In January, the Supreme Court upheld an earlier judgment by the Court of Appeal, ruling in favor of Ecobank in a debt dispute with Honeywell Flour Mills Plc and two other firms. The case revolved around an unsettled debt of N5.5 billion.

Justice Emmanuel Agim, delivering the lead judgment, found in favor of Ecobank on two out of three issues identified.

He criticized the Court of Appeal for holding that the appellants lacked the locus standi to institute the suit at the Federal High Court and for claiming that the trial court lacked jurisdiction.

The three firms, namely Honeywell, Anchorage, and Siloam, had sued Ecobank in August 2015, seeking a declaration that they had no further debt obligations to Ecobank after paying N3.5 billion of the N5.5 billion debt. They also requested the court to compel Ecobank to update their status on the “Credit Risk Management System Portal of the Central Bank of Nigeria.”

Ecobank countered by stating that a repayment agreement had been reached in July 2013, whereby N3.5 billion was to be settled within six months. The bank rejected Honeywell’s request to extend the repayment period over one and a half years.

According to Ecobank, the debt repayment agreement had expired in August 2013.

The ongoing dispute between Ecobank and the Honeywell companies, as well as the alleged diversion of assets by Oba Otudeko, has cast a cloud over the recent acquisition of FBN Holdings shares. The coming days will shed light on how FBN Holdings will respond to Ecobank’s demands and address the concerns raised regarding the alleged unsettled debt.