Ecobank Nigeria Limited has appealed Flour Mills of Nigeria Plc against its decision to the acquisition of equity stake in Honeywell Flour Mills Plc.
Brand News Day Nigeria understands that the bank alleged that Honeywell Group Limited, the mother company of the firm, had not been servicing its loans with Ecobank.
Recall that Flour Mills of Nigeria (FMN) and Honeywell Group Limited (HGL) announced that they have signed an agreement to which Flour Mills will acquire Honeywell Group’s portfolio company, Honeywell Flour Mills PLC (HFMP).
According to Stanbic Research, the management team of Flour Mills Nigeria Plc plans to fund the deal through cash and debt funding.
In a hitting reaction, Ecobank, in a letter, addressed to the Managing Director of Flour Mills of Nigeria and signed by solicitors to Ecobank, Kunle Ogunba, and Associates, the company, as well as the public and corporate bodies, were warned of the “danger inherent in dealing in any shares of the company.”
The bank alleged that it had advanced several loan facilities to Honeywell Flour Mills, including working capital disbursements. Further stating that as a result of the failure of the company to liquidate its 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.
The letter reads: “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 (Notice of Appeal is herein enclosed and marked as Annexure C).
Ecobank Issues Warning To Flour Mills Of Nigeria Not To Acquire Honeywell
“Hence, the effect of the above is that there is currently a winding-up action/proceeding pending against the said Honeywell Group Limited.”
According to the bank, ”a provision of Section 577 of the Companies and Allied Matters Act 2020, 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…”
The bank noted that with the reference to the provision of Section 577 of the Companies and Allied Matters Act 2020, thus has restricted Honeywell Group from moving ahead with the sale of Honeywell Flour Mills to Flour Mills of Nigeria.
“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,” the bank added.
Both companies have been in a long-standing legal battle since 2015 over an unpaid debt of N5.5 billion by the latter. While Ecobank is maintaining that Honeywell is indebted to it to the tune of the aforementioned money, out of which N3.5 billion had been paid, Honeywell claimed to have paid the debt in full.
In the wake of the legal tussle, Dr. Oba Otudeko, Honeywell Group chairman, had told a Court of Appeal that the sum was owed to individual companies. These companies include Anchorage Leisures Limited, Siloam Limited, and Honeywell Flour Mills Plc.
Otudeko maintained that his companies had paid N3.5 billion as of December 12, 2013, as the full and final payment for the N5.5 billion debt as agreed by the parties at a July 22, 2013 meeting.