$225M Debt: GHL Disputes FBN’s Claims, Insists It’s Not Indebted to the Bank

*Declares financial firm scheming to take over company as moratorium subsists pending commercial oil production 

*Accuses FBN of fraudulently obtaining order freezing bank accounts 

*Dismisses allegation of diversion as wicked, malicious, false, injurious and libellous

Alex Enumah in Abuja

Contrary to claims of alleged debt to First Bank of Nigeria (FBN) Plc, the management of the General Hydrocarbons Limited (GHL), has disputed any such claims, insisting it was not indebted to the bank let alone in the sum of $225 million.
Setting the record straight, GHL, which cited several agreements between it and FBN, explained that there was a subsisting moratorium pending the commercial oil production.
In addition to this, it also stated that there was a Federal High Court judgement in its favour, adding further that FBN’s claim of indebtedness, especially in the media space was “misleading and malicious”.

Referencing a January 10/11 publications in the media, including the social media wherein a “Federal High Court in Lagos was reported to have frozen the accounts of GHL in all financial institutions in Nigeria and restrained the banks from releasing funds to the company owned by Mr. Nduka Obaigbena, the Chairman of THISDAY/ARISE Media Group “over alleged outstanding indebtness amounting to $225,802,379.79m to First Bank”, GHL’s Director of Strategy and Operations, Abdelmuizz Bello, stressed that the claims of FBN were untrue and misleading.

While further putting the record straight, Bello recalled how the oil firm entered into a legally binding, enforceable Subrogation Agreement with First Bank  on May 29, 2021.
By the terms of the agreement, FBN was to fund GHL’s exploration, production and development of OML 120 in exchange for sharing profit from oil proceeds from the OML in a 50:50 ratio after statutory payments and taxes over 8 years.

Bello explained that the FBN 50% share would then be used to pay down its non-performing loans of about $718 million, which was discounted to $600m to resolve its solvency issues therefrom.  
“In its quest to stay afloat, the FBN loan was  sold at $600million as an Eligible Banking Asset (EBA), with comfort from GHL. The FBN then collected the cash from Assets Management Company of Nigeria (AMCON) with which they rebuilt the bank without meeting GHL’s needs.

“The FBN non-performing loan arose from FBN’s unsecured and reckless lending to Atlantic Energy under separate Strategic Alliance arrangements, in which GHL had no nexus to or connection with.
“The agreements made it clear that the Non-Performing Loan had nothing to do with GHL beyond the fact that 50% of profits from OML 120 due to FBN under the Subrogation Agreement will be used by FBN  to settle the hole created in its books by the Non-Performing Loan (NPL).
“For clarity, Atlantic Energy operated OMLs 26, 30, 34 and 42 – very different from GHL’s OML 120,” he said.

The Director of Strategy and Operations at GHL claimed that the agreements signed with the oil company enabled FBN to return to good standing because instead of declaring a loan loss of N302Bn at the then exchange rate, the signing of the Tripartite agreement with GHL enabled FBN to declare a profit of N151Bn ($377.5million) for the year ending December 31, 2021.

Bello stated that GHL signed the agreement trusting and believing that the FBN was a bank with integrity, and would comply and continue to comply with its obligation to fund OML 120.
Certain that FBN’s failure and refusal to do the needful might have opened a challenge to its audited financial statement, the oil firm wondered that, “given its non-compliance with conditions precedent for its return to profitability, could those profits remain valid? And  were investors in its current rights issues duly informed?”

Bello also recalled that FBN’s market capitalisation before the agreement was N256.6Bn, adding that had it declared a loss of N302Bn, the bank would have had a negative capital of N46Bn.
“FBN then immediately realised profitability from GHL’s subrogation agreement. GHL signed the agreement believing and trusting that the FBN as a bank with integrity would comply and continue to comply with its obligations to fund OML 120.

“But it has clearly not done so. Following the agreements with GHL, FBN’s market capitalisation of N256.6Bn, more than tripled to over N900Bn as of 30th November 2024,” he said.
Meanwhile, the director stated that GHL’s grouse with FBN was its failure to meet its agreed and executed financial commitments, which GHL had believed would be made,  when it signed the agreement resulting in critical challenges for the development of OML 120.

According to him, although FBN had disbursed $185million, the way and manner of the disbursement which was agreed to be 5 days after funding request, sometimes lasted up to 70 days after funding request.
This, GHL stated, led to a situation where service providers led by Schlumberger,  Baker Hughes and Century, that were supposed to be paid at the same time for various interventions were paid sporadically at different times.

The situation, it explained, resulted in massive losses in day rates and downtimes, leading to inefficiencies and losses of over $147 million, including  an arbitration award to one of the service providers.

On the alleged diversion of funds, Bello revealed that contrary to the claims of FBN, its credit and risk team verified and approved all contracts and invoices due to the contractors engaged for the development and operations of the oil mining lease and made payments directly to these contractors and service providers.

“The allegations of a diversion of the monies advanced to GHL are therefore befuddling and without merit as payment were made by FBN directly to service providers after vetting and approval by its credit and risk teams.

“At the end of the day, FBN became a conflicted  lender, risk manager and operator at the same time, when it got involved in vetting, approving and paying all invoices. At the same time, FBN also approved and later appointed a CFO for GHL, taking full responsibility for all financial disbursements.
“It is important to also mention that the oil block is over 75 kilometres offshore Nigeria, with a Floating Production Storage and Offloading (FPSO) that requires transportation and logistics support with over 250 personnel on the FPSO and the associated submersible rig.

“This has involved heavy logistics planning with over 500 helicopter sorties, engagement of platform supply vessels, security vessels, mooring vessels, etc., which were provided daily over the course of the last 40 months. All these expenditures, including food, were vetted, approved and paid directly by FBN’s credit and risk teams.

“In view of the approval process for the funds put in place by FBN, and the payment made directly to contractors and service providers, the allegation of diversion contained in some publications is therefore wicked, malicious, false, injurious and libellous,” he said.
Furthermore, GHL maintained that the disbursed loan of $185million was not due for repayment since the loan was still within the moratorium period as per the Facility and Tripartite Agreements.

According to Bello, “The loan is only due when there are profits to be shared 50:50 from commercial oil production. Clearly, there is need for much more money, which FBN has refused to provide.
“Instead of performing its role as a lender, who was saved from the abyss, FBN is trying to bully and force GHL out of the transaction and take over the oil bloc, using its directors and other proxies with this clearly induced crisis.”

In addition, Bello pointed out that First  Bank did not make any demand for repayment of the facilities until after they  recently lost in court, because they knew that the loan was not due for repayment.
“Clearly, FBN is either illiquid, unable or unwilling to fund the project as agreed after they had made profits upfront.

“GHL is seeking to exercise its options under the agreement to find new lenders and partners that can be efficient and cost-effective to save the project for Nigeria, should FBN remain intransigent.
“The Subrogation Agreement contains a clause that allows GHL to seek for alternative financing in the likelihood FBN is unable to provide such financing.

“Following FBN’s non-performance under the terms of the Subrogation Agreement, GHL was left with no option but to approach the Court to seek injunctive reliefs and protective orders to secure its commercial and economic interests and find resolution via arbitration,” the firm claimed.

He further disclosed that GHL had approached the Federal High Court and after arguments by both sides, obtained the following injunctions against First Bank on December 12, 2024:
“An Order restraining FBN from obstructing or preventing GHL from obtaining or securing loan facilities or funding necessary for the exploration or operation of OML 120.

“An Order restraining FBN from making any calls or demands, or taking any steps whatsoever to enforce any security, receivables, instrument, finance documents or assets of GHL, which have been charged as security.
“An Order  restraining FBN from appointing an operator, asset manager or any person/institution of the same/similar ilk in respect of OML 120, pending the hearing and determination of the arbitration proceedings between GHL and FBN.”

The director regretted that despite the existence of a subsisting court order, FBN, using the same lawyers, who lost at the Federal High Court, presided by Justice Allagoa, went to another judge of coordinate jurisdiction, during recess without disclosing the earlier judgement, to obtain an interim Mareva injunction restraining GHL and its shareholders from operating their accounts over a purported and unfounded debt of $225.8million.

“FBN had since weaponised the Mareva injunction, which it obtained on December 30, 2024, to confuse the public and befuddle the issues,” he explained, describing the incidence as a clear abuse of the court process.
 While observing that, “this impunity is now back before the Federal High Court, Lagos,” GHL expressed confidence that sooner or later, justice would be served.