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Ecobank warns against Flour Mills-Honeywell deal over ‘huge debt’

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Ecobank warns against Flour Mills-Honeywell deal over ‘huge debt’

 

Ecobank Nigeria Limited has thrown a spanner into the wheel of the N80 billion deal between Flour Mills Plc and Honeywell Flour.

The bank said it has placed a Caveat over the move by Flour Mills Nigeria PLC to acquire 71.69 percent of Honeywell Group Limited.

In a statement on Tuesday, the bank said Honeywell Group was “hugely indebted to it” and that the debt is currently a subject of litigation.

Kunle Ogunba & Associates, Ecobank’s lawyer, said consequent upon a press release circulated in several online publications, the bank decided to alert the general public and the corporate bodies on the danger inherent in dealing in any shares of Honeywell.

Ecobank, while narrating its interest in the company, said it advanced several loan facilities which includes working capital disbursements to Honeywell Flour Mills Plc and that due to the failure of the company to liquidate the said loan facilities, Ecobank was constrained to commence winding up proceedings against Honeywell Group Limited at the Federal High Court, Lagos, in suit no: FHC/L/CP/1571/2015.

Ecobank said Honeywell Group Limited, being the Respondent to the winding up petition, objected to the jurisdiction of the trial court to preside over the said suit. This, the bank said, was upheld by the court.

Aggrieved with the decision, Ecobank said it filed an appeal (with appeal No: CA/L/1041/2016) at the Court of Appeal, Lagos Division and that upon review of Ecobank’s case, the appellate court found merit in the appeal, and held that the winding up proceedings against Honeywell Group Limited was properly commenced and that the Federal High Court had jurisdiction to hear the said petition.

READ: Flour Mills, Honeywell Flour merge in N80b deal

Ecobank said that while the said decision of the Court of Appeal has been appealed to the Supreme Court, the Court of Appeal’s judgment remains valid and subsisting till date.

The bank stated that the effect of the Appeal Court judgment is that there is currently a winding-up action/proceeding pending against the said Honeywell Group Limited.

Ecobank added that Section 577 of the Companies and Allied Matters Act 2020 “CAMA” provides that: “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 bank said the estate or effects of Honeywell Group Limited includes (but is not limited to) its 71.69% stake in Honeywell Flour Mills Plc which it now seeks to divest to Flour Mills contrary to the express provisions of the law which prohibits the said sale/transfer or divestment during the course of the winding up proceedings.

It added that it is clear that Honeywell Group Limited is legally “stopped from sequestering and/or disposing any of its assets pending the final determination of the winding up action commenced against it”.

The bank said that while it believed that Flour Mills or any other interested person or group will adhere to its wise counsel and comply with its demands as a responsible and publicly listed entity, it shall not hesitate to deploy all available legal options to prevent this “audacious illegality from coming to fruition”.

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