Money market place
The acquisition of Honeywell Flour Mills, which Flour Mills of Nigeria and Honeywell Group Minimal considered was a performed offer has been challenged by Ecobank Nigeria Minimal on the grounds that the firm is hugely indebted to it inspite of denials, writes Ugo Aliogo
The announcement by Flour Mills of Nigeria (FMN) and Honeywell Group Constrained (HGL) previous Monday that they had signed an agreement to which FMN would receive Honeywell Group’s portfolio business, Honeywell Flour Mills Plc (HFMP) has hit a brickwall as Ecobank Nigeria Plc has challenged the move by inserting a caveat on the deal.
The two providers, in a joint statement, mentioned Honeywell Group would dispose of a 71.69 for each cent stake in its outlined subsidiary to Flour Mills at a overall enterprise value of N80bn.
Flour Mills announced in a separate assertion that it had entered into an agreement with Initial Financial institution of Nigeria Limited to get the bank’s 5.06 for each cent equity in HFMP.
“Consequently, on completion of the acquisition, and matter to getting all requisite regulatory approvals, FMN is established to keep a circa 76.75 for each cent equity interest in HFMP,” it claimed.
In accordance to the joint statement, the proposed blend is topic to approval from the correct regulators.
“The complementary transaction combines FMN’s marketplace-foremost offerings that include grain-dependent foods, sugar, starches, oils, spreads and breakfast cereals with HFMP’s sector major varied and differentiated variety of carbohydrate items,” it explained.
It mentioned that stakeholders would advantage from the more than 85-12 months put together monitor file of FMN and HFMP as effectively as their shared aim of making cost-effective and nutritious foodstuff available to Nigeria’s populace.
The agreement allows Flour Mills to acquire 71.69 per cent stake in Honeywell, although a individual pact with FBN Holdings Group permits the miller to get the financial expert services group’s stake of 5.06 per cent in Honeywell, bringing its consolidated keeping in Honeywell to 76.75 for every cent, according to a regulatory filing at the Nigerian Trade Constrained last Monday.
That could necessarily mean FMN will be getting above about 6.09 billion models of Honeywell’s 7.93 billion ordinary shares, priced at an opening cost of N3.39 for every device very last Monday.
But the disposal of the 71.69 per cent stake by Honeywell will be done on the foundation of an enterprise benefit N80 billion.
The offer marks the third key merger and acquisition transaction involving a quoted organization this month, subsequent Rainoil’s buyout of extra than 60 for every cent stake in Everlasting Oil and Ardova’s takeover of Enyo Oil.
Honeywell has returned 182.5 per cent in the previous one yr, according to Economic Situations data.
FMN noted income in the sum of N771.6 billion for the money 12 months finished 31st December 2020, even bigger than what was recorded by Nigeria’s most important financial institution Access Bank for the identical period of time, standing at N764.7 billion.
Commenting on the transaction, the Managing Director, Honeywell Team, Obafemi Otudeko, claimed, “Today’s announcement is in line with the evolution of Honeywell Team and our vision of generating benefit that transcends generations. For around two a long time, we have supported Honeywell Flour Mills to develop a solid business with a generation capacity of 835,000 metric tonnes of food items for each annum.
“Following the transaction, Honeywell Group will be strongly positioned to consolidate and develop its investment decision pursuits, which includes as a lover of choice for traders in important progress sectors.”
On his aspect, the Group Taking care of Director of FMN, Omoboyede Olusanya, claimed, “The proposed transaction is aligned with our vision not only to be an field leader but a countrywide champion for Nigeria. We feel that this will develop an chance to incorporate the exceptional abilities of two strong organizations.
“As a result, we will have a much better-rounded and more complete skill set accessible to us as a mixed diversified foodstuff small business, as a result enabling us to improved provide our shoppers, prospects and other stakeholders, while giving staff members with accessibility to broader prospects.”
When the two organizations had been seeking ahead to sealing the deal, Ecobank Nigeria Constrained on Tuesday placed a caveat on any share of HFMP on the grounds that the company is vastly indebted to the lender and that the debt is presently a matter of litigation.
The purchasers beware was contained in a statement released by lender by means of its counsel, Kunle Ogunba & Associates, titled “Purchase of Honeywell Team Limited’s 71.69{22377624ce51d186a25e6affb44d268990bf1c3186702884c333505e71f176b1} stake in Honeywell Flour Mills Constrained- “Caveat Emptor” .
Ecobank in the assertion said that consequent on a push launch circulating in various on the net publications and as even more contained on Honeywell Team Limited’s internet site: “honeywellgroup.com” wherein notification of the proposed divestment of Honeywell Team Limited’s 71.69{22377624ce51d186a25e6affb44d268990bf1c3186702884c333505e71f176b1} stake in HFMP, cautioned the common public and the corporate bodies on the danger inherent in working in any shares of the enterprise.
Ecobank when narrating its desire in the enterprise, reported it state-of-the-art a number of loan facilities which provided performing capital disbursements to HFMP and that due to the failure of the corporation to liquidate the said personal loan facilities, it was constrained to start winding up proceedings versus Honeywell Group Constrained at the Federal Significant Courtroom, Lagos in accommodate no: FHC/L/CP/1571/2015.
The lender stated that Honeywell Group Minimal, being respondent to the winding up petition, objected to the jurisdiction of the trial court to preside in excess of the mentioned fit, this the lender mentioned was upheld by the trial court docket.
Aggrieved with the conclusion of the trial court, Ecobank mentioned it submitted an attractiveness (with attractiveness No: CA/L/1041/2016) at the Courtroom of Attraction, Lagos Division and that on critique of Ecobank’s case, the appellate court docket discovered benefit in the attractiveness, and held that the winding up proceedings from Honeywell Group Confined was thoroughly commenced and that the Federal Higher Courtroom had jurisdiction to hear the said petition.
Ecobank reported that though the said conclusion of the Courtroom of Appeal has been appealed to the Supreme Court docket, the Court of Appeal’s judgment remains valid and subsisting till day. It extra that the effect of the Attraction Courtroom judgment is that there is at this time a winding-up action/continuing pending from the claimed Honeywell Team Constrained.
It drew focus to the provisions of Segment 577 of the Corporations and Allied Issues Act (CAMA) 2020 which suggests: “Where a corporation is remaining wound up by the courtroom, any attachment, sequestration, distress or execution set in power in opposition to the estate or results of the business right after the commencement of the winding up is void.”
The bank stated the estate or consequences of Honeywell Group Confined features (but is not minimal to) its 71.69{22377624ce51d186a25e6affb44d268990bf1c3186702884c333505e71f176b1} stake in HFMP which it now seeks to divest to FMN contrary to the convey provisions of the regulation which prohibits the claimed sale/transfer or divestment through the system of the winding up proceedings. It additional that it is distinct that Honeywell Group Confined is legally estopped from sequestering and/or disposing any of its assets pending the ultimate perseverance of the winding up action commenced from it.
“Furthermore, the HFMP in which the shares are held is also at present indebted to Ecobank by advantage of the Court of Appeal judgment delivered on the 14th day of December, 2020 in charm selection: CA/LAG/CV/975/2019, wherein the Appellate Court held that the corporation did not repay its debt to our client in line with the settlement of parties. Although the reported judgment is subject matter of a even further appeal to the Supreme Courtroom.”
As a result, the financial institution demanded that FMN in its greatest company curiosity quickly cease and desist from consummating the topic transaction which aims to divest the assets of a enterprise currently being wound-up (Honeywell Team Confined).
“Please be further educated that the belongings of both Honeywell Team Confined and HFMP are the topic of the winding-up action and therefore based mostly on the doctrine of “lis-pendens” (in addition to the provisions of CAMA equipped previously mentioned) you are suggested to refrain from dealing with the topic asset which forms element of the subject make any difference of litigation. ”
The bank claimed that although it believes that Flour Mills or any other fascinated person or team will adhere to its wise counsel and comply with its needs as a dependable and publicly mentioned entity, it stated that it shall not wait to deploy all readily available authorized selections to avoid this audacious illegality from coming to fruition. It noted that it was constrained not only to need an urgent reversal of the alleged “divestment processes” as epitomised by a counter publication, notification or caveat in that regard.
Decided to move forward with the offer, FMN and HFMP in a their response on Wednesday, mentioned the proposed acquisition is not in breach of any courtroom purchase.
FMN, in a statement acquired from the Nigerian Trade Minimal signed by its Business Secretary, Joseph Umolu, stated the announcement by the group to assume majority shareholder standing of Honeywell was produced right after carrying out required due diligence and acquiring proper authorized guidance.
It explained: “Consequently, FMN confirms that this arrangement is not in breach of any subsisting get of court docket in matters relating to any 3rd occasion. This additional assurance has grow to be essential in look at of the publication captioned ‘Ecobank warns towards acquisition of Honeywell Flour Mills, alleges corporation going through winding up proceedings’.
“Stakeholders are, hence, urged to manage their have faith in in FMN’s management, whose steps are guided by world-wide finest practices, as we get the job done diligently to manage the group’s sterling standing as a single of Nigeria’s primary and oldest agro-allied companies.”
On its part, HFMP, in a assertion signed by its Enterprise Secretary, Yewande Giwa, mentioned: “It is pertinent to set the record straight that there is no winding up petition currently pending or stay against HFMP in any court in Nigeria. There is also no pending courtroom buy restraining trading in the shares of HFMP or inhibiting HFMP or its proprietors from dealing in its property.
“The difficulty as to regardless of whether HFMP is indebted to Ecobank is continue to before the courts and the last final decision continues to be the distinctive protect of the courts. It is also critical to state that the Court docket of Enchantment judgement becoming referred to in the stories did not declare HFMP to be indebted to Ecobank.”
The enterprise certain investors, regulators and stakeholders that in all of its engagements with FMN, it acquired independent lawful information.
For now, both equally investors and market place watchers are on the lookout forward to how the situation would be settled.
