Flour Mills of Nigeria Plc has assured its stakeholders that its recent acquisition of a majority stake of about 71.69% in Honeywell Flour Mills Plc did not breach any subsisting court order. The diversified Nigerian agribusiness company confirmed that the deal was made after carrying out necessary due diligence and obtaining appropriate legal guidance.
The assurance became necessary after Ecobank had warned Flour Mills of Nigeria Plc. to desist from acquiring Honeywell Flour Mills Plc. The bank had alleged that Honeywell Group Limited (the parent company of Honeywell Flour Mills) had not been servicing its loans with the bank.
Consequently, on its failure to liquidate its loan facilities, the bank stated that it was constrained to commence winding-up proceedings against the parent company at the Federal High Court, Lagos in suit no: FHC/L/CP/1571/2015.
What Flour Mills of Nigeria is saying
Reacting to the recent development, Flour Mills of Nigeria Plc confirmed that its agreement with HFMP did not breach any subsisting court order.
In a recent press release issued by the company, signed by its secretary, Umolu Joseph, the firm noted that: “Flour Mills of Nigeria Plc (FMN) wans to assure its stakeholders that the recent announcement by the Group to assume majority stakeholder status of Honeywell Flour Mills Plc (HFMP) on Monday 22nd of November, 2021, was made after carrying out necessary due diligence and obtaining appropriate legal guidance.
‘’Consequently, FMN confirms that this agreement is not in breach of any subsisting Order of Court in matters relating to any third party.’’
What Honeywell Flour Mills is saying
Honeywell Flour Mills Plc has debunked the claims made by Ecobank, stating that there is no winding up petition (either pending or live) against the company in any court in Nigeria.
In a recent press release titled: “RE: PURCHASE OF HONEYWELL GROUP LIMITED’S 71.69% STAKE IN HONEYWELL FLOUR MILLS PLC,” signed by its Secretary, Yewande Giwa, and filed with the Nigerian Exchange Limited (NGX), the company assured its stakeholders that the recent transaction was made in compliance with all rules and regulations.
Reacting to the alleged winding up petition, the company stated that: “It is pertinent to set the record straight that there is no Winding up Petition currently pending or live against HFMP in any court in Nigeria. There is also no pending Court Order restraining trading in the shares of HFMP or inhibiting HFMP or its owners from dealing in its assets. HFMP assures its investors, regulators and stakeholders that in all of its engagements with FMN, it received independent legal advice and asserts that the transaction is not in breach of any subsisting Order of Court, The issue as to whether HFMP is indebted to Ecobank is still before the Courts and the final decision remains the exclusive preserve of the Courts. It is also important to state that the Court of Appeal judgement being referred to in the reports did not declare HFMP to be indebted to Ecobank.
The company also added that, “The assertion lack merit, were written in bad faith and are a deliberate attempt to undermine a transaction that will result in substantial benefit to the Nigerian economy and entrench the collaboration of two publicly quoted companies. As a responsible corporate citizen, we have entered the transaction with FMN having taken all legal issues into consideration.’’
Honeywell’s history with Ecobank
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.
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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).
Nairametrics reported that currently, both companies owe about N220 billion in external loans per their 2021 half-year results. Honeywell currently has a debt balance of N78.5 billion while Flour Mills is also debt-laden with about N142.8 billion in debt.
According to Stanbic Research, the management team of Flour Mills Nigeria Plc plan to fund the deal through cash and debt funding.
Ecobank Nigeria Limited had advised Flour Mills of Nigeria Plc against the proposed acquisition of equity stake in Honeywell Flour Mills Plc, alleging that the latter had not been servicing its loans with the bank.
Following Ecobank’s letter addressed to Flour Mills of Nigeria (FMN) Plc’s Managing Director with regards to loans that have not been liquidated by Honeywell Flour Mill with the bank, investors of Honeywell Flour Mills Plc initiated massive sell-offs of the company’s shares reversing yesterday’s gains by 9.78%.
The shares of Honeywell Flour Mills dropped from N4.09 as at the start of trading session yesterday to N3.69 by the close of business in the same period. Market capitalization also shed about N3.17 billion in the period under review.