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Court warns CBN, NCC, others against concluding Etisalat’s sale

By Bridget Chiedu Onochie (Abuja) and Adeyemi Adepetun (Lagos)
11 February 2019   |   4:20 am
The Federal High Court, Abuja, has warned the Central Bank of Nigeria (CBN), Nigerian Communications Commission (NCC) and others involved in the move...

9mobile center

• Aggrieved shareholders plan fresh suits
The Federal High Court, Abuja, has warned the Central Bank of Nigeria (CBN), Nigerian Communications Commission (NCC) and others involved in the move to sell Etisalat (9mobile) against taking any further step in that direction.

The development followed a claim by some aggrieved investors that in spite of a subsisting order of court made on October 10, 2018, by Justice Binta Nyako, barring parties to the transaction from taking further steps pending the determination of the suit, the CBN, First Bank Plc and others had sold the firm and transferred its ownership.

The warning by the court was contained in Form 48 issued by the registrar on institutions listed as defendants in the suit filed by the aggrieved shareholders, through Afdin Ventures Ltd and Dirbia Nigeria Ltd.

The Form 48 reads in part: “Take notice that unless you obey the directions contained in the order of the Federal High Court number three, Abuja, made on the 10th of October 2018 ordering parties to maintain status quo, with regard to the sale of Etisalat Nigeria Limited (rebranded 9mobile), you will be guilty of contempt of court and will be liable to be committed to prison.”

The affected defendants include Karington Telecommunications Ltd, Premium Telecommunications Holding NV, First Bank of Nigeria Plc, CBN, Etisalat International Nigeria Ltd (trading under the name and style of 9mobile) and the NCC.

The aggrieved subscribers, who claimed to be major investors in Etisalat, said they were excluded from the firm’s decision making and therefore want a refund of their investment estimated at $43,330,950.

Afdin and Dirbia, in a newly filed court documents, alleged that the defendants have not only sold the company, despite the existing restraining order, they have effected a transfer of ownership to a new set of buyers. They exhibited newspaper publications indicating that the defendants have proceeded with the sale in breach of the pending court order.

The aggrieved shareholders, in a pre-action notice issued by their lawyer, Mahmud Magaji (SAN), are threatening to institute fresh suits against the CBN, NCC and First Bank in an effort to retrieve their investment and accrued interest.

The pre-action notice, copies of which were sighted in Abuja, was addressed to the CBN governor and the Executive Vice Chairman/Chief Executive Officer of NCC.

Part of the notice reads: “The intending plaintiffs, who are shareholders in Etisalat Nigeria Ltd, having purchased a total number of 1, 300,391 at $13,003,910 only and 3,300,004 Class A shares at $30,030,040) intend to sue for the recovery of their investment, dividends on their shares, and damages for breach of contract.

“Please kindly recall that, by the custodian agreement, all the shares certificates of the plaintiffs, were kept under your custody. However, you have failed to exercise your role in good faith leading to the sale of Etisalat Nigeria Limited to Teleology Nigeria Ltd, at the detriment of our clients.”

In the document, the intending plaintiffs aver that:
• First Bank was both a receiving bank and also a custodian of the shares acquired by the intending plaintiffs from Karington Telecommunications Ltd;

• under the Private Placement Memorandum (PPM), First Bank, as custodian of the intending plaintiffs’ shares in Karington Telecommunications Ltd, has the obligation to ensure that the shares held by the intending plaintiffs, as beneficial owners, have the duty of custody, safekeeping, warehousing and preservation of the property (shares) of the intending plaintiffs, amongst others;

• First Bank, in allowing the shares of Emerging Markets Telecommunications Services Ltd (EMTS) to be so charged as security for the syndicated loan by fixed charge, failed to keep the shares of the intending plaintiffs separate and/or segregated, and has allowed the intending plaintiffs’ shares to be co-mingled with the shares of other investors and thereby failed in its custodial duties in clause 5.1.2 at page 71 of the PPM;

• First Bank also failed to observe and perform its warranty that it shall ensure the observance and performance of its custodial duties in the private placement memorandum (PPM) and also as contained in the application form;

•The intending plaintiffs have suffered the liability of the complete loss of their investment in the shares of Karington Telecommunication Ltd and indirect economic interest in the shares of EMTS which are to be sold to recover the unpaid syndicated loan from the 13 banks, of which First Bank is a part.”

According to the notice, the intending plaintiffs having not received any dividend payment since 2009 and have completely lost their investment or indirect holding/economic interest in the shares of EMTS, which First Bank allegedly allowed to be used as a fixed charge to secure the repayment of the loan by the syndicated banks to EMTS, the loan which has remained unpaid and the security is being enforced.

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