Ecobank has warned Flour Mills of Nigeria, FMN to back off from its proposed N80 billion take-over deal with Honeywell Group. On Monday, the two leading agro-allied companies reached an agreement for Flour Mills to acquire a 71.69 percent stake from Honeywell Flour Mills and also a 5.06 percent FBN Holdings equity in Honeywell Flour Mills.
Speaking on the deal Omoboyede Olusanya, the group managing director of FMN, said “the proposed transaction is part of our global growth strategy; which is aligned with our vision to not only be an industry leader but also, a national champion for Nigeria in the Food and Agro-allied industries.’
On his part, Obafemi Otudeko, managing director of Honeywell Group Limited, said “today’s announcement is in line with the evolution of Honeywell Group and our vision of creating value that transcends generations.”
But as it seems, Ecobank will not allow the two parties to walk away with the transaction without a fight due to a humungous N5.5 billion loan the commercial bank claimed is owed by Honeywell.
According to a letter addressed to the managing director of Flour Mills by Kunle Ogunba and Associates, counsels to Ecobank, the bank said Honeywell has failed to pay back the loans. The bank said it had dragged the company to court, and since the case has not been disposed off it would amount to a nullity any deal reached to acquire Honeywell at this time.
The pan-African bank has, therefore, warned anyone, company panning to acquire shares in Honeywell to desist as doing so would be at a great risk.
Ecobank claimed it had facilitated several loan services, including working capital disbursements to Honeywell Flour Mills that are yet to be redeemed. It cited a pending suit no FHC/L/CP/1571/2015 at the Federal High court, Lagos.
The bank said “while the said action was dismissed at the federal high court and the court of appeal, it is pertinent to state that an appeal with appeal no: SC/700/2019 has been filed challenging the said decision at the supreme court (notice of appeal is herein enclosed and marked as annexure C).
“Hence, the effect of the above is that there is currently a winding-up action/proceeding pending against the said Honeywell Group Limited.
“Where a company is being wound up by the court, any attachment, sequestration, distress or execution put in force against the estate or effects of the company after the commencement of the winding-up is void,” the letter said.
The bank said the pending case bars Honeywell Group from entering into a deal proceeding with Flour Mills of Nigeria.
“Consequently, we hereby demand that Flour Mills of Nigeria Plc, in its best corporate interest, immediately cease and desist from consummating the subject transaction, which aims to divest the assets of a company being wound up (Honeywell Group Limited).
“Please be further informed that the assets of both Honeywell Group Limited and Honeywell Flour Mills Plc. are the subject of the winding-up action and thus based on the doctrine of “lis-pendens” (in addition to the provisions of CAMA supplied above) you are advised to refrain from dealing with the subject asset which forms part of the subject matter of litigation.”
In a statement released by the Nigerian Exchange, NGX on Monday Flour Mills said the take-over of Honeywell is part of the company’s strategic drive to become the leading agro-allied industry in the country.
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