Issuing houses deny AP allegations

In the last week, African Petroleum Plc (AP) has accused Access Bank and other underwriting firms of failing to fulfil obligations to underwrite shares issued for purchase at the Stock Exchange in August 2008.

According to a newspaper advertorial on July 27, on behalf of AP, the August share offer was 36% subscribed, leaving 64% left to be covered by underwriters.

Of that remainder, only 31% has so far been covered by some of the issuing houses, leaving 35% of the shares that had been offered, under contention.

AP, through its Company Secretary, Elizabeth Obiajulu Idigbe, said that out of the 11 banks that went into agreement with the company as Issuing Houses and Underwriters to AP's 2008 Public Offer/Rights Issue, only six banks: Afribank Nigeria Plc, Guaranty Trust Bank Plc, United Bank of Africa Plc, Union Capital, Zenith Capital, and First City Monument Bank Plc, had met their obligations.

Mrs Idigbe said some issuing houses had not met their obligations to AP. These include Access Bank, Intercontinental Bank, Diamond Bank, Bank PHB (which has partly met its obligation), and Vetiva Capital.

A voice of contention

A source from one of the issuing houses, which preferred anonymity, said that all the parties that AP approached initially "agreed in principle" to underwrite a small percentage of the total amount the company was planning to issue.

He said that "the agreement in principle indicates that there was no formal agreement" in real terms.

The source further explained that when all the parties came together to sign to formalise the agreement, they were surprised at the new figure AP presented because the small percentage initially agreed on had been increased.

He said that all the parties refused to sign the agreement. However, he said that it later came to his notice that some banks said to have paid for the underwriting went ahead, in a separate agreement, to sign the document.

Tunde Falasinnu, AP's Chief Operating Officer, said that the oil marketing firm has gone to court for arbitration. "The case is being handled doggedly and we are fighting hard to make sure we get the money," he said.

"I'll would not like to comment further on the matter because it is already under arbitration in court which we expect to start today (July 27). All I can say for now is that some banks have honoured their agreement with the company."