The sweetheart proposition by Flour Mills of Nigeria Plc to acquire a major stake in Honeywell Flour Mills Plc may have been scuppered by Ecobank Nigeria Limited which has alleged that Honeywell Group Limited, the parent firm, had not been paying up its loans to the bank.
The deal would have seen Flour Mills of Nigeria acquire 71.69 per cent of Honeywell Group’s stake in its listed subsidiary.
Honeywell Limited is owned by Oba Otudeko, billionaire businessman and former chairman of FBN Holdings Plc.
The company is reportedly indebted to Ecobank to the tune of N3.5billion which had seen the former file a suit against the bank asking the court to determine whether or not its three subsidiaries, Anchorage Leisures Ltd, Honeywell Flour Mills Plc and Siloam Global Limited, were still indebted to Ecobankafter having reached an agreement to pay the sum of N3.5 billion as full and final settlement of the companies’ indebtedness.
The court held that Honeywell was not in any way indebted to the bank having liquidated the said loan. Dissatisfied, the bank approached the appellate court to challenge the decision of the lower court and got judgment entered in its favour. The controversy rages on.
On Monday, November 22, Nigeria’s biggest flour-maker, Flour Mills of Nigeria Plc, announced that it had brokered a deal to buy out the majority equity interest in rival Honeywell Flour Mills. The agreement enables Flour Mills to purchase 71.69 per cent stake in Honeywell, while a separate pact with FBN Holdings Group allows the miller to acquire the financial services group’s stake of 5.06 per cent in Honeywell, bringing its consolidated holding in Honeywell to 76.75 per cent, according to a regulatory filing at the Nigerian Exchange Limited.
However, a letter signed by solicitors to Ecobank, KunleOgunba and Associates, and addressed to the Managing Director of Flour Mills of Nigeria, cautioned the public and corporate bodies on the “danger inherent in dealing in any shares of the company.” Ecobank said it had advanced several loan facilities, which included working capital disbursements, to Honeywell Flour Mills.
The bank said due to the failure of the company to liquidate the said loan facilities, it was constrained to commence winding up proceedings against Honeywell Group Limited at the Federal High Court, Lagos in suit no: FHC/L/CP/1571/2015.
It said, “However, while the said action was dismissed at the Federal High Court and the Court of Appeal, it is pertinent to state that an appeal with appeal no: SC/700/2019 has been filed challenging the said decision at the Supreme Court.Hence, the effect of the above is that there is currently a winding-up action/proceeding pending against the said Honeywell Group Limited.”
The bank quoted a provision of Section 577 of the Companies and Allied Matters Act 2020 as saying, “Where a company is being wound up by the court, any attachment, sequestration, distress or execution put in force against the estate or effects of the company after the commencement of the winding-up is void…”
This, according to Ecobank, restricts Honeywell Group from proceeding with the sale of Honeywell Flour Mills to Flour Mills of Nigeria.
It added, “Consequently, we hereby demand that Flour Mills of Nigeria Plc, in its best corporate interest, immediately cease and desist from consummating the subject transaction, which aims to divest the assets of a company being wound up (Honeywell Group Limited).
“Please be further informed that the assets of both Honeywell Group Limited and Honeywell Flour Mills Plc. are the subject of the winding-up action and thus based on the doctrine of “lis-pendens” (in addition to the provisions of CAMA supplied above) you are advised to refrain from dealing with the subject asset which forms part of the subject matter of litigation.”
Culled from The Capital.ng
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