FBN Holdings saw its shares jump by 7.86% this week, wrapping up on January 10, 2025, in positive territory, even with a loan dispute hanging over its head involving General Hydrocarbons Limited (GHL).
A confidential communication to Central Bank Governor Yemi Cardoso has illuminated a matter stemming from a loan agreement concluded during Mr. Oba Otudeko's tenure at FBN Holdings. The strategy involved leveraging proceeds from Oil Mining License (OML) 120 to address First Bank's non-performing loans and mitigate substantial provisioning requirements in 2021. However, GHL alleges a breach of contract by the bank.
To make matters worse, First Bank has frozen $225.8 million of GHL’s funds across various banks, which GHL argues goes against a previous court ruling.
Despite these ongoing legal issues, FBN Holdings managed to post a 7.86% increase, closing at N30.20 in the second week of January 2025.
Starting 2024 at N23.55, FBN Holdings experienced a solid bullish trend in the first quarter, hitting a high of N35.55 in March. But things took a turn in April as uncertainty around the Central Bank of Nigeria’s recapitalization mandate caused the stock to dip to N23.90, even with a trading volume of 218 million shares. By July, the stock fell further to a low of N20.95.
Fortunately, the stock began to recover gradually in August, climbing to close at N28.05 in December, marking a 19% gain for the year. This positive momentum has carried into January 2025, with the stock reaching N30 and closing at N30.20 on January 10, supported by a robust monthly trading volume of 272 million shares.
On December 30, 2024, the Federal High Court in Lagos granted a Mareva injunction that froze $225.8 million in assets belonging to General Hydrocarbons Limited (GHL) amid a loan dispute with First Bank of Nigeria (FBN). This injunction was issued as GHL initiated arbitration proceedings against FBN, alleging a breach of their partnership agreement by the bank.
GHL's legal representatives have labeled the injunction as unlawful and intend to contest it in court, asserting that a prior court decision prohibits FBN from taking action against GHL's OML operations or associated loan transactions. The ongoing legal battle is causing significant delays in essential oil exploration and development activities related to OML 120.
Sources indicate that mediators attempting to resolve the conflict have recommended a significant restructuring of GHL’s leadership, which would involve appointing new Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs). However, both parties remain at an impasse regarding the proposed terms, hindering the resolution process.
Additionally, FBN has suggested the appointment of an Independent Asset Manager under a new Framework Agreement as part of the mediation efforts. GHL has vehemently opposed this proposal, perceiving it as an attempt by FBN to gain control over its assets, including OML 120, and to alter its management and operations.