Orjiako: The Real Story Behind the Loans

Orjiako: The Real Story Behind the Loans

Oluchi Chibuzor

For some months now, there have been media attacks aimed at tarnishing the hard-earned reputation of the Chairman of Seplat Energy Plc, Dr. A.B.C Orjiako, in relation to certain loan facilities taken by Shebah to carry out drilling campaign in OML 108.

It is pertinent to state that the current frenzy over the loan matter is not a fresh case but the same case that has been reported variously in the media since 2016.

The most astonishing fact in all this is that findings have always revealed that Orjiako was never a borrower and never utilised the facilities as an individual and one keeps wondering why the deliberate attempt to drag the orthopaedic surgeon through the mud.

Indeed, cases related to the loan had been in various courts between London and Nigeria since 2014, until the latest initiated by Zenith Bank in October 2021. All the cases were in relation to the inconclusive drilling campaign in Ukpokiti oil field, offshore the Niger Delta.
Incidentally, all these cases have received extensive media attention and each time, unfortunately, Orjiako has been mentioned repeatedly as the debtor in these facilities.

The fact however is he was merely the majority shareholder of Shebah and guarantor of the facilities.

According to findings by this reporter, Orjiako was not even a member of management of Shebah but stepped up to salvage the company by making payments to the banks using personal and family assets to liquidate the facilities.

Interestingly, the banks disbursed the said loan directly to the service providers of the company and never directly to Orjiako.
Investigation and emerging facts have revealed extensive misrepresentations in the applications for the interim orders as well as in the publications.

The origin of the matter is that in 2012 Shebah E and P obtained a $150 million loan facility from a consortium of banks (Afreximbank/Diamond- now Access/Skye- now Polaris) led by Afrexim. The facility was meant for work and drilling campaign at the Ukpokiti field (OML 108) operated by Shebah E&P.

Shebah drilled a successful horizontal well, the first of its kind in the offshore Niger Delta and tested 4,000 barrels per day of oil and condensate production but encountered large gas reserves. The company then decided to find a solution to the huge associated gas based on professional oil field best practices before continuation of the oil/ condensate production.

The company required more funds to commercialise the gas to avoid excessive flaring while producing the discovered oil.
As a result of that, the Afrexim-led consortium of lenders, could not provide further facilities to Shebah to conclude the operations. In 2014, Shebah then approached Zenith Bank, which appraised the situation and provided a $250 million loan facility fully approved by its board to salvage the situation.

Zenith proposed to pay the consortium of banks $50 million to reduce their collective exposure, enhance the facility to $350 million, provide Shebah with additional funds to monetise the gas and produce the discovered oil. The enhanced facility would have had Zenith join and lead the syndicate with $250 million, while the consortium of existing lenders would have reduced their exposure and stay at $100 million (about $33 million each).

But Zenith further requested (in line with Shebah’s need) to have a moratorium period of nine months to conclude the projects and extend the facility tenure to five years. This was meant to spread the cash flow and enable easy repayment of the enhanced facility.
Surprisingly, the Afrexim consortium rejected the $50 million offered by Zenith on the grounds that Zenith should not lead the syndicate and that they were not willing to extend the tenure of the facility which still had about two and half years to run as at the time of Zenith’s offer.

Investigations reveal that, preparatory to monetising the discovered gas, Shebah negotiated and executed a GSPA of $2.5 billion for 20 years gas sale on a take or pay basis with the Nigerian Gas Company(NGC) as the gas off-taker supported by a payment bank guarantee in the sum of $70 million from Zenith bank.

Interestingly, the Afrexim consortium rejected all the efforts being made by Shebah and proceeded to file an action to call the facility in 2014 ( just two years after final draw down). The call of the facility ahead of the maturity triggered the default on the loan.

Thereafter, on February 19, 2016, Mr. Justice Phillips of the London High Court delivered a judgment in favor of the Afrexim consortium for the repayment of the $150 million loan facility. The judgment creditors then registered the judgment in Federal High Court in Lagos and applied for enforcement of the judgment.

According to findings by this reporter, the defendants, immediately opposed the registration and the enforcement of the judgment based on their convictions on rule of law and on the fact that they would like to negotiate an out-of-court settlement and pay back the loan under a restructured arrangement.

The case is still live before the Federal High Court in Lagos and the court is awaiting the outcome on the settlement which would be entered as consent judgment.

But contrary to the syndication agreement by the Afrexim consortium, Polaris bank transferred its share of the judgment facility to the Asset Management Corporation of Nigeria (AMCON).

Notwithstanding the unilateral action by Polaris Bank, AMCON then initiated a fresh action in Federal High Court Abuja, not minding that the same case had already got a ruling in London and subject to a contested enforcement proceedings in the Federal High Court Lagos.

It was the case that AMCON filed that an ex-parte order was granted in 2019, which was widely reported in the media.

But it is worthy to note that Orjiako has so far paid the following sums to the lenders: Firstly, he has repaid $89.3 million (out of a total principal of $150m) including the $20 million paid this year to the consortium of AMCON/Afrexim/Access Bank toward the repayment efforts. This means that if his proposal is accepted by these creditors, the outstanding principal amount would be $60.7 million.

Secondly, he had made a proposal to the creditors to accommodate Zenith Bank in the distribution of the repayment, but they have not accepted the proposal, which would have prevented the Zenith Bank action of October 2021.

Thirdly, in the case of Zenith Bank, Orjiako has also paid back $54 million (including proceeds of forced sale of his family Seplat shares by Zenith Bank) out of the principal of $70 million and is currently engaging the bank to negotiate an out of court settlement.
This means that Orjiako has paid a total sum of $143.3million ($89.3 million and $54 million).

The payments are clear indications of his high moral duty and integrity to repay a loan he did not utilise personally and instead for oil assets that are not generating any revenues.

From the deluge of negative media reports, most of which, misrepresent the matter, there is a strong impression that there is deliberate smear campaigns against him to inflict as much damage as possible to reputation.

It must also be emphasised that Seplat, where Orjiako is the Chairman is not involved in any of these matters what so ever contrary to the nuances in the media reports.

The Seplat board of directors being very strong in corporate governance had activated all governance and compliance processes and procedures to ensure that there are no breaches of any aspect of regulatory compliance or its governance policies.

There is information also that the parties maybe considering out-of-court settlement of the commercial dispute. A positive outcome of such a settlement would bring the entire impasse to a final close.

In a completely different case, Access Bank versus Cardinal Drilling, Orjiako unfortunately had a misfortune of being blamed for the Cardinal facility because he is seen as the alter ego of the company.

The billionaire’s involvement was just as an investor in Cardinal where his company Shebah invested alongside Platform Petroleum and Maurel et Prom, all of who are founding shareholders of Seplat.

Neither Orjiako nor other shareholders ever received dividend from Cardinal. All the equity investments were lost but again, curiously, only Orjiako was singled out for the smear campaign.

Indeed, the sustained negative media campaigns against Orjiako are most unfortunate as they have portrayed an innocent person in a very bad light with enormous reputational damage.

It is important to note that these kind of misrepresentations are misinforming the global investing community with its negative consequences for Nigeria.

Orjiako has continued to lead Seplat Energy to its exponential growth attaining the enviable position as an indigenous Nigerian Independent Energy company listed in the London and the Nigerian Stock Exchanges, among many other feats and must be allowed to concentrate in his avowed mission of contributing positively to the transformation of Nigeria’s energy sector through Seplat as well as in supporting the federal government’s economic renaissance drive.

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