General Hydrocarbons clears air on $225m loan litigation with First Bank

General Hydrocarbons, which is currently locked in litigation with First Bank over a financial $225 million deal, says it  will continue to fight for justice and damages while remaining “open for mediation and resolution.”

The company,in an explainer on the deal described it as a “Project Finance relationship” as opposed to a “normal commercial loan”.

It said it was FBN that approached it (GHL) ,  the awardee and licenced operator of OML 120, to “finance the exploration,development and production of OML 120 and share profit 50:50,while paying FBN cost of finance.”

According to the company,”the FBN 50% share is dedicated to paydown its non-performing loan of $600million (discounted from $718million  from AMCON’s Eligible Bank Asset) in order to  resolve FBN’s solvency issues.”

It said that in doing that GHL guaranteed FBN’s liability to AMCON, through a Tripartite Agreement between GHL,FBN and AMCON.”

The result of the Tripartite Agreement,it said ,was  that the bank “became immediately profitable and moved from a loss of N302 billion to a profit of  N151 billion  for 2021FYE. 

“However,in return,it has failed  to meet its commitment under the Tripartite Agreement to fully finance and make the payments required for the optimal exploration and development  of OML120 as agreed in the Tripartite Agreement,resulting  in losses in day rates and downtimes of $47million,which has now snowballed into the current impasse as FBN has failed to make further required payments for the drilling and exploration of OML 120.

“Essentially,FBN failed to fulfill its condition precedent to profitability in failing to finance OML 120 as agreed,leaving its financial statements open to challenge.Meanwhile the FBN’s claim of $225million loan is not due as it is still covered by moratorium,given that the project has not achieved  commercial production.So,at best FBN’s claim is premature.”

 GHL said while it has  gone for Arbitration which is ongoing and FBN has gone to court with a series of Exparte Mareva measures, the first of which has been vacated and the case is now being heard on its merit, “the second temporary Mareva is pending at the Federal High Court in Port Harcourt,Rivers State,both supported by ‘wild,unfounded and unproven allegations of dissipation of assets.’”

GHL denied dissipating any assets and said “all payments were made by First Bank DIRECTLY to 3rd parties after due diligence and verification by FBN,and the 3rd parties are mainly global,world class,reputable companies with strict compliance regimes.

It said it is “filing a claim of over $1billion in various courts,while FBN is claiming $225billion debt which it never complied with in line with the agreements.”