What is the genesis of the crisis rocking the acquisition of AEDC shares?
I think much of the controversy is needless, from reports I’ve seen that the facts are either incomplete or even not correct. The point of the matter is that AEDC is owned 40 per cent by government over areas that it serves, and 60 per cent by private investors.
From that point of view and based on subsisting decisions of the courts, 60 per cent of those shares are owned by CECA, Copperbelt Energy Corporation Plc (CEC), a leading Zambian Energy Company, the ‘A’ stands for Africa.
It is that company, CEC Africa Investments Limited (CECA) which, in its search for opportunities, came to Nigeria during the privatisation of the power sector. They linked up with a Nigerian company called Xerxes Global Investment Ltd, and reached an agreement to contribute $20 million each from a company called KANN Utility Co. Ltd. (Kogi, Abuja, Niger and Nasarawa)
The two companies agreed to contribute 50-50% to bid for 60 per cent ownership of AEDC. They were successful but unfortunately Xerxes did not live up to the agreement, meaning they did not pay their $20 million as part of the 50 per cent agreement. CECA not only paid their $20 million, but because they were afraid of losing the opportunities which the laws then provided, they had to pay another $20 million making it $40 million. Xerxes did not put money on the table but continued to claim that they owned KANN 50 per cent based on an original agreement.
But as you well know, in any business if an agreement is reached but you do not pay, you cannot claim to have shares in the company, and the evidence is clear to the court of law that Xerxes did not pay.
All the $40 million was paid by CECA. This background is important. Much of the controversy is because CECA has paid all the $40 million, so they claim they own KANN 100 per cent, while Xerxes claims they own 50 per cent through shares they could not have because they did not pay. Basically this is the situation.
When CECA paid this money they needed more money to pay for what they bided to own the 60 per cent shares of AEDC. They then went and borrowed another $120 million from UBA, along with the other sums they were able to pay.
That gave them 60 per cent of AEDC. Once this was achieved, the Nigerian company, Xerxes started claiming they own 60 per cent, while they have not paid anything. That in my view is immoral.
You can claim that you have performed a bond, and that you were entitled to something out of consideration, but to come out having not paid a cent, and claim you are equal to the person who has paid a 100 per cent is not justifiable under any consideration. Basically, this is the crux of the matter.
Has your company entered into any discussion with Xerxes over this disagreement?
There has been ongoing discussion but without an agreement, and because of this, CECA went for arbitration as provided for in the agreement. It went to London for arbitration. During the arbitration process, the arbitrators said all the shares are owned by CECA, because they are the ones who paid, but they gave a concession, saying to Xerxes if you can go and pay within three months $10 million, you can be entitled up to 25% of the company. This $10 million you pay to CECA because they’ve paid.
They didn’t stop there; they also imposed a cost, saying since money has been paid much earlier, this is the cost you pay for the delay. I don’t have the exact figure of the cost but it is in the neighbourhood of $2 million.
After the London arbitrator’s decision, CECA came and registered that decision with a court of law in Nigeria giving it an effect of a decision of a court in Nigeria. Despite the fact that Xerxes participated in the arbitration, they came back and reneged on the decisions taken there and instead went to court to lay claims on why they think they should not accede to the arbitration.
The court rejected this and they appealed. Clearly, this is a group of people who are not concerned with business as we know it but creating an environment that really makes business impossible and giving Nigerians a bad name.
CECA registered this in a court of law then eventually they sought and were given a reprieve to hold an Annual General Meeting (AGM) to enforce this decision. The AGM was held which basically said yes you now own the company 100 per cent, they adopted a new profile of shareholding, but Xerxes then objected.
However, CECA was getting into trouble because its expectation as to what dividend it can get from AEDC never materialised, they had borrowed money and UBA was threatening to take over the company. Some of the shareholders in Zambia decided there was a need to quit at this time, because if they don’t, not only are they going to lose their shares, there could be problems because of this debt. So they decided to sell.
Other parties were to buy it, from South Africa, we in North South Power heard about this.
Now, this CECA has investment not only in AEDC but it also owns 26 per cent of North South Power of which I am chairman. We saw the opportunity that if we buy this company we are buying our shares back and that is exactly what we did. We went to Zambia and decided to buy the shares of the two major groups who wanted to sell, this will give us a majority.
Once we gained a majority other shareholders also said they wanted to sell their shares.
Again, very importantly, this company CECA is on the Stock Exchange of Lusaka, and the regulations provide that if you acquire 35 per cent or more of any company that is traded on the stock exchange then you must make an offer to all shareholders to make up their mind whether they want to stay with you or with somebody else. Even in Nigeria we have similar regulation.
So, we had to make an offer to all the other shareholders in their thousands and as of today we own about 97 per cent of CECA, and I as a result of that, is the chairman of CECA.
ny registered in Mauritius, operating in Zambia but today it is owned by Nigerians and it is still on the stock exchange of Zambia presently.
Our main strategic reason was to buy our shares back. Secondly buying CECA meant we’ll carry the assets and liabilities of the company, meaning we now own 60 per cent of AEDC but we are also indebted to UBA to the tune of $120 million which they borrowed and have not paid back.
This is where our locus stand is today. We bought CECA, which owns 60 per cent of the shares of AEDC, and because of the London arbitration, which is registered in Nigeria, and there is nowhere any court has changed this, Xerxes may be in court arguing, they have about five different cases in court, not one court has said this is not correct.
The only court that has spoken has said yes this is correct, go and do an AGM, so whatever Xerxes and their people are saying, it isn’t based on fact or based on law, it is based on the way business used to be handled in Nigeria.
You bring foreigners in, you frustrate them, and they end leaving and leaving the assets to you. But we are not foreigners, we are Nigerians like Xerxes, with probably a good or better reputation. So, we are not bothered. Anybody from Xerxes can show any proof. Going to court does not confer legitimacy, it’s because the courts know the facts, that why they move from one court to the other. This is where we are at the moment.
Is there any possibility of out of court settlement?
You see, I personally saw Shehu Malami of Xerxes to see whether that was possible. And I was surprised by the recent release that indicated that what we are doing is illegal. There is nothing illegal about it.
Yes, it is possible to talk with people at CAC and to get them to write a letter, but a letter does not have the strength of a mandate of a court of law. If the CAC wants to change things, they have to go to a court to reverse that decision as to the ownership of those shares, and they have not done so.
Source: leadership.ng
