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Business | Debtors & Recovery

SEPLAT Plc Refutes Being Party to Cardinal Drilling Services Loan with Access Bank

Dec 03, 2020   •   by   •   Source: Proshare   •   eye-icon 2358 views

Thursday, December 03, 2020 / 12: 04PM / Comments off SEPLAT Release/ Header Image Credit: Seplat Petroleum


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Over the week, theCorporate Headquarters of Seplat Petroleum Development Company Plc (SEPLAT) atNo. 16A Temple Road, Ikoyi, Lagos was sealed by policemen on Wednesday,December 2, 2020, ostensibly on behalf of a Receiver/Manager appointed by oneof Nigeria's tier-1 lending institutions, Access Bank Nigeria Plc. According toa manager at the company, the sealing order prevented the company's staff andother tenants from accessing the building.

 

Routine enquiriesconcerning the sealing suggest that SEPLAT received copiesof legal documents which included the following: aletter dated 2nd December 2020 from Messrs KunleOgunba & Associates, stating thatthey had been appointed as the Receiver/Manager of the building; Court documents filed by Access Bankagainst SEPLAT, Cardinal andother named Defendants.

 

SEPLAT's Corporate Headquarters was believed to have been sealed within the week in line with an exparte Court Order dated 13th November 2020, which was obtained in favour of AccessBank Plc in connection with a Loan Facility the bank granted to Cardinal DrillingServices Limited.

 

The Meat ofThe Matter

 

Investigations also revealed that in 2012,Cardinal Drilling Services Limited obtained a Facility from Diamond Bank (nowAccess Bank) to purchase the CDS Rigs 101, 201, 202, and 203. The Facility was securedby a fixed and floating Debenture over Cardinal's assets (the"Debenture"). 

 

Managers at SEPLAT say the company was nota party to the Facility or the Debenture and did not provide any guarantees orindemnities on behalf of Cardinal or otherwise in connection with theFacility. 

 

It was understoodthat Cardinal Rigs were used to provide drilling services to SEPLAT andother companies. CDS 101 and 201 were used to execute SEPLAT's 2019 workprogramme and all4 Rigs were critical to SEPLAT's future drilling plans.

 

With time, it was understood that Cardinal wasunable to service the outstanding part of the Facility, which Access Bank showed to be an outstanding debt of US$85.8m.

 

It was learned that Cardinal and Access Bank hadon the 15th January2019, agreed on a settlement of $45 Million, to be paid in two (2) installmentsby 31st December 2019. 

 

On the 25thof April 2019, Cardinal failed to pay the 1st tranche of the settlement amount(i.e., $30 Million), which was due on or before the 18th of April 2019.


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SEPLAT'sSupply Chain Intervention

 

Given the importance of the Cardinal Rigs toSEPLAT's operations, SEPLAT supported discussions between Cardinal and AccessBank to resolve Cardinal's indebtedness and Access Bank's proposed foreclosure on the Rigs. 

 

To date, managers at SEPLAT insist that the company has not made anybinding commitment to Access Bank in connection with Cardinal'sindebtedness. 

 

Indeed,SEPLAT claims to have merelysought to support settlement discussions between Cardinal and Access Bank, toretain its continued use of the Cardinal Rigs in ongoing operations which was, therefore, basically a verticalsupply chain protection strategy.    

 

Following Cardinal's increasing indebtedness andfailure to pay the agreed settlement, Access Bank joined SEPLAT in its remedialaction strategy to recover its loan from Cardinal. 

 

According to availableinformation Cardinal, in its response to Access Bank, noted that it was in discussions withSEPLAT on possible funding support. 

 

Cardinal'sDeadly Debt Migraine

 

Clause 6 of theDeed of Debenture on the loanfacility granted to Cardinal allowed Access Bank theright to appoint a Receiver/Manager over the company's assets if Cardinal failed to liquidate the Facility. On12th October 2020, Access Bank appointed Kunle Ogunba & Associates to actas the Receiver/Manager.

 

On 13th November 2020, Access Bank filed a Courtaction against SEPLAT; Cardinal; a Seplat Director; and a Cardinal Director(the "Defendants"). 

 

According to courtproceedings, Access Bank asked the Court grant the following prayers: validate the appointment ofKunle Ogunba & Associates as the Receiver/Manager; validate theReceiver/Manager's authority to take possession of the 4 Cardinal Rigs andother assets of persons and companies presumably connected to Cardinaldrilling; restrain all Defendants from disposing or dealing with the Assets;declare that the Defendants have no right to enter into, or deal with, any ofthe Assets.

 

A call to an officer atSEPLAT, who requested for anonymity as he was not authorized to speak on thematter, confirmed that the company's office was sealed withoutprior notice. He noted that the officiallegal counsel of the company had observed that the sealing of the Temple Road office of the upstream Oil and Gas company may have been in violationof the rights of the ownerand other tenants whowere allegedly undulyprevented from accessing the building.

 

The officer further notedthat the Temple Office was notone of SEPLAT's assets, as SEPLAT was merely a tenantin the building. He believedthat any court orderon SEPLAT's assets did not extend to the Temple Road premises of the company.

 

 

RelatedLinks to Release

1.      Seplattwitter  Seplatpetroleum status on temple Road

2.     Seplat PressReleases 

3.     Seplat website

4.     Seplat's CorporateDisclosure on the NSE

 

 

EDITORS NOTE:

In the light of the claims made above and theinformation available from financial returns/reports; we are looking at andwill report on the governance/related party relationship between Seplat PLc andCardinal Drilling Nigeria. 



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Proshare Nigeria Pvt. Ltd. 

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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