Finally, AP pays off Access Bank

After washing their dirty linen in public, Access Bank and African Petroleum (AP) have settled the imbroglio between them over the later's delay in paying its outstanding $35 million (about ₦5.6 billion) loan facility to the bank

A release by the bank on Tuesday evening said that AP issued an Afribank draft number 381342 dated August 4 for the sum of ₦2.9 billion (₦2,945,305,039.69) in its favour. With the terms of agreement entered into by the parties, the $35 million debt amounts to ₦4.5 billion at an agreed rate of ₦128 per dollar.

The draft value represents net settlement after taking into consideration AP's credit balance of ₦1.5 billion in its account with the bank.

‘AP is not insolvent'

Earlier, on Tuesday, Justice Ibrahim Auta of the Federal High Court dismissed a case filed by Access Bank to declare AP insolvent.

In his ruling, the trial judge held that some facts were concealed from the court when the ex-parte motion for the wind up was granted.

He said, "The petitioner (Access Bank) has not been fair to the court. It is clear that the respondent (AP) is not insolvent."

The judge said the fact that AP had an excess of $1.36 billion in its account with Access Bank was not known to the court when the bank prayed for a motion ex parte to wind up AP.

He said the court also found that there is a debt dispute between the parties, "from evidence before the court the respondent is not denying debt, but it is refusing to pay at the exchange rate demanded by the petitioner," he said.

He further held that the appropriate exchange rate is an issue to be determined by an appropriate court and not by the Federal High Court, and therefore concluded that the motion ex parte was wrongly procured.

He subsequently ruled that the ex parte be set aside and the case struck out.

Grounds for judgment

Before giving his ruling, the presiding judge noted that three issues were used in determining the suit; whether the petition is ripe for hearing, whether the petitioner concealed some facts when it prayed the court for an ex parte motion to wind up AP, and whether the debt is seriously disputed.

On the issue of the ripeness of the petition, Justice Auta held that the petition is premature as section 4 of the wind up rules stipulates that a motion must be filed five clear days before the court hearing, which was not the case in this suit.

"There is something fishy about the whole process, the respondent only got to know about the petition through newspaper publication," he said.

Exchange rate was the issue

Addressing a press conference after the ruling, Tunde Falasinu, the chief operating officer of AP, said the case was thrown out on the grounds that Access Bank concealed some facts from the court by not disclosing that AP had ₦1.55 billion in its accounts with Access Bank and that the bank still owed AP underwriting commitment of about ₦4.8 billion in respect of its 2008 hybrid offer.

Mr. Falasinu, who acknowledged the AP debts, said there were issues regarding the terms of payment. "Do not forget that the bone of contention has been on the actual exchange rate that would be used to determine the payment," he said.

Since the issue broke out about three weeks ago, both parties have argued about the actual value of the naira to be used to offset the debts. While AP claimed an exchange rate of ₦116.62 to $1, Access Bank insisted on ₦127 due to fluctuations in naira's value.

Legislators' Resolution

Mr. Falasinu further described as "ridiculous" the call by the House of Representatives Committee on Capital Market that the AP 2008 hybrid offer should be cancelled and the proceeds returned to the investors.

"That is not possible. Certificates for the offer have been issued, dividend has been paid and you now expect the offer to be cancelled."

Already, the House of Representatives has dissociated itself from the decision of the committee, on the grounds that the committee did not have such power and that the matter ought to be brought before the plenary session of the whole house before it was made public.

Mr. Falasinu said AP was going ahead with its plans to set up a Greenfield refinery in Lagos for which it has set up a partnership with the Nigeria National Petroleum Corporation.