Nigeria's FirstBank, a leading multinational bank and financial services provider, has addressed recent media coverage concerning a commercial transaction with General Hydrocarbons Limited (GHL) that is currently under litigation.
As a law-abiding corporate entity in Nigeria, FirstBank emphasizes its respect for the judicial process and, therefore, cannot comment on matters that are still pending in court, as they are considered sub-judice.
Nonetheless, the bank feels compelled to provide the following clarifications to counter the misleading narratives presented in certain media reports.
In a statement, the bank said that a commercial transaction currently exists between FirstBank, acting as the lender, and GHL, the borrower, in which FirstBank has provided multiple credit facilities to GHL for the development of certain Oil Mining Lease assets.
These financial arrangements are supported by comprehensive loan agreements that clearly outline the responsibilities of both parties and detail the security provisions in place.
While FirstBank has consistently fulfilled its obligations under these agreements, the current dispute arises from FirstBank’s insistence on good governance and transparency in the transaction, which GHL has declined to accept.
FirstBank identified breaches by GHL, including the misappropriation of funds.
In response, FirstBank proposed the appointment of an independent operator, mutually agreed upon by both parties, to manage the financed asset transparently. This approach aimed to enhance project visibility, safeguard stakeholder interests, and add value for all involved. However, GHL not only dismissed this fair and reasonable proposal but also demanded additional funding from FirstBank.
Instead of adhering to the Bank's terms for securing further financial support, GHL chose to initiate unnecessary arbitration proceedings.
GHL opted to pursue unnecessary arbitration proceedings rather than comply with the Bank's conditions for obtaining additional financial assistance. At present, GHL does not have any significant claims before the Federal High Court. Their involvement with the court was limited to seeking preservative orders during the ongoing arbitration process. While some of the preservative orders requested by GHL were approved, others were denied, the bank said.
Furthermore, FirstBank stated that it is the sole entity to have lodged a substantive claim against GHL at the Federal High Court. The nature of FirstBank's claim differs from the dispute that GHL has referred to arbitration. Specifically, FirstBank's claim pertains to additional credit facilities extended to GHL, and the associated offer letters and financial documents explicitly indicate that any disputes arising from these subsequent facilities are to be adjudicated by a court of competent jurisdiction in Nigeria, rather than through arbitration.
Consequently, it is incorrect to assert that FirstBank abused the process of the court, as indicated in the statements.
In addition, GHL extracted crude from the Floating Production Storage and Offloading (FPSO) vessel and diverted the proceeds. Given the ongoing violations, failure to meet financial obligations, and efforts to obscure the Bank from the established security and repayment avenues, the Bank, as a secured lender, had no alternative but to seek legal recourse through the courts. This action aims to protect assets, recover the misappropriated funds, prevent future incidents, and uphold FirstBank’s interests. It is evident that the courts do not condone or defend illegal activities and contract violations.
FirstBank boasts a rich and extensive history of over 130 years dedicated to meeting the financial needs of its customers. The bank is steadfast in its commitment to supporting the legitimate business goals of its diverse clientele. Concurrently, FirstBank is focused on fostering a robust credit culture, encouraging borrowers to fulfill their repayment obligations while taking necessary legal measures to address any attempts to evade these responsibilities.
The bank reassures its vast customer base, stakeholders, and the public that it remains strong, composed, and unwavering in its dedication to delivering exceptional services both domestically and internationally.
Additionally, FirstBank extends its sincere gratitude to its shareholders for the notably oversubscribed Rights Issue of its parent company, First Holdco Plc (“FirstHoldco”), during the initial phase of its capital raising efforts. The bank anticipates a similarly successful conclusion to the recapitalization process when it is announced by FirstHoldco.