$43m debt: Court warns CBN, NCC, others against concluding Etisalat’s sale
A Federal High Court in Abuja has warned the Central Bank of Nigeria (CBN), the Nigerian Telecommunication Commission (NCC) and others involved in the transaction for the sale of troubled telecom firm, Etisalat (9mobile) against taking further steps to conclude the sale. The warning was informed by claim by some aggrieved investors that despite a subsisting order of the court, made on October 10, 2018 by Justice Binta Nyako, barring parties to the transaction from taking further steps pending the determination of the suit, the CBN, First Bank and others have allegedly sold the firm and transferred its ownership. The warning by the court is contained in a Form 48 issued by the court’s Registrar, on institutions listed as defendants in the suit marked: FHC/ABJ/CS/288/2018 filed by the aggrieved shareholders, through Afdin Ventures Ltd and Dirbia Nigeria Ltd. The Form 48 reads: “Take notice that unless you obey the directions contained in the order of the Federal High Court number three, Abuja, made on the 10th of October 2018 ordering parties to maintain status quo, with regard to the sale of Etisalat Nigeria Limited (rebranded 9mobile), you will be guilty of contempt of court and will be liable to be committed to prison.”
The affected defendants are Karington Telecommunications Ltd, Premium Telecommunications Holding NV, First Bank of Nigeria Plc, Central Bank of Nigeria, Etisalat International Nigeria Ltd (trading under the name and style of 9mobile) and the Nigerian Communication Commission. The aggrieved subscribers, who claimed to be major investors in Etisalat, said they were excluded from the firm’s decision making and therefore want a refund of their investment estimated at $43,330,950. Afdin and Dirbia, in newly filed court documents, alleged that the defendants have not only sold the company, despite the existing restraining order, they have effected a transfer of ownership to a new set of buyers. They exhibited newspaper publications, indicating that the defendants have allegedly proceeded with the sale in breach of the pending court order.
The aggrieved shareholders, in a pre-action notice issued by their lawyer, Mahmud Magaji (SAN), are threatening to institute fresh suits against the CBN, NCC and First Bank in an effort to retrieve their investment and accrued interest. The pre-action notice, copies of which were sighted in Abuja, are addressed to the Governor of CBN and The Executive Vice Chairman/Chief Executive Officer, NCC. Part of the notice reads: “The intending plaintiffs, who are shareholders in Etisalat Nigeria Ltd, having purchased a total number of 1, 300,391 at $13,003,910 only and 3,300,004 Class A shares at $30,030,040) intend to sue for the recovery of their investment, dividends on their shores, and damages for breach of contract. “Please kindly recall that, by the custodian agreement, all the shares certificates of the plaintiffs, were kept under your custody. However, you have failed to exercise your role in good faith leading to the sale of Etisalat Nigeria Limited to Teleology Nigeria Ltd, at the detriment of our clients.
The intending plaintiffs aver that First Bank of Nigeria Plc was both a receiving bank and also a custodian of the shares acquired by the intending plaintiffs from Karington Telecommunications Ltd. “The intending plaintiffs aver that, under the private placement memorandum (PPM), First Bank of Nigeria Plc, as custodian of the intending plaintiffs’ shares in Karington Telecommunications Ltd, has the obligation to ensure that the shares held by the intending plaintiffs, as beneficial owner, has the duty of custody, safekeeping, warehousing and preservation of the property (shares) of the intending plaintiffs, amongst others “First Bank, in allowing the shares of Emerging Markets Telecommunications Services Ltd (EMTS) to be so charged as security for the syndicated loan by fixed charge, failed to keep the shares of the intending plaintiffs separate and/or segregated, but has allowed the intending plaintiffs’ shares to be co-mingled with the shares of other investors and thereby failed In its custodial duties in clause 5.1.2 at page 71 of the PPM
“First Bank also failed to observe and perform its warranty that it shall ensure the observance and performance of its custodial duties in the private placement memorandum (PPM) and also as contained in the application form. “The intending plaintiffs have suffered the liability of the complete loss of their investment in the shares of Karington Telecommunication Ltd and indirect economic interest in the shares of EMTS which are to be sold to recover the unpaid syndicated loan from the thirteen banks, of which First Bank of Nigeria PIc is a part. The intending plaintiffs also never received any dividend payment since 2009; have completely lost their investment or indirect holding/economic interest in the shares of EMTS, which First Bank of Nigeria allowed to be used as a fixed charge to secure the repayment of the loan by the syndicated banks to EMTS and which loan has remained unpaid and the security is being enforced.