Seplat Petroleum Development Company Plc (NSE: SEPLAT) has reacted to the sealing of its Corporate Headquarters located at 16A Temple Road, Ikoyi Lagos. The company had published a corporate action on the Nigerian Stock Exchange to this effect.
According to the publication seen by Investogist, the company stated that the sealing was in connection with a court case by Access Bank against Cardinal Drilling Services Limited, a third party providing drilling services to SEPLAT. It is understood that Cardinal Drilling has outstanding loan obligations to Access Bank.
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SEPLAT went on to state that it is neither a shareholder in Cardinal Drilling, nor has outstanding loan obligations or guarantees to Access Bank and did not at any time make any commitments or guarantees in respect of Cardinal Drilling’s loan obligations to Access Bank.
It therefore strongly believes that there was no merit or justification for the sealing of its office, and has taken prompt legal action to vacate the court order pursuant to which the building was sealed.
The office was sealed on Wednesday by policemen acting on behalf of the court appointed Receiver/Manager; Kunle Ogunba & Associates in line with an ex parte court order dated 13th November, 2020 which was obtained in favour of Access Bank plc in connection with a loan facility that bank granted to Cardinal Drilling Services.
Cardinal Drilling Services Limited (formerly Caroil Drilling Nigeria Limited) is owned by Shebah Petroleum Development Company Limited SPDCL, the parent company of SEPLAT. According to the 2019 Full year financial Statement of SEPLAT, Cardinal Drilling Services Limited provides drilling rigs and drilling services to SEPLAT, and transactions between the two parties in 2019 amount to N2.89 billion, $9.44 million.
On its global website, Cardinal Drilling International referring to the joint venture that created Cardinal Drilling Services Limited, it stated “the above innovative commercial arrangement of SEPLAT mid-wifing Cardinal Drilling Nigeria Limited, enable Cardinal Drilling Nigeria funding to be realized as Maurel & Prom through Cardinal Drilling SAS will contribute 40%.”
Investigations by Proshare, revealed that in 2012, Cardinal Drilling Services Limited obtained a Facility from Diamond Bank (now Access Bank) to purchase the CDS Rigs 101, 201, 202, and 203. The Facility was secured by a fixed and floating Debenture over Cardinal’s assets.
It was understood that Cardinal Rigs were used to provide drilling services to SEPLAT and other companies. CDS 101 and 201 were used to execute SEPLAT’s 2019 work programme and all 4 Rigs were critical to SEPLAT’s future drilling plans.
With time, it was understood that Cardinal was unable to service the outstanding part of the Facility, which Access Bank showed to be an outstanding debt of US$85.8m.
It was learned that Cardinal and Access Bank had on the 15th January 2019, agreed on a settlement of $45 Million, to be paid in two (2) installments by 31st December 2019.
On the 25th of April 2019, Cardinal failed to pay the 1st tranche of the settlement amount (i.e., $30 Million), which was due on or before the 18th of April 2019.
Given the importance of the Cardinal Rigs to SEPLAT’s operations, SEPLAT supported discussions between Cardinal and Access Bank to resolve Cardinal’s indebtedness and Access Bank’s proposed foreclosure on the Rigs.
To date, managers at SEPLAT insist that the company has not made any binding commitment to Access Bank in connection with Cardinal’s indebtedness.
Indeed, SEPLAT claims to have merely sought to support settlement discussions between Cardinal and Access Bank, to retain its continued use of the Cardinal Rigs in ongoing operations which was, therefore, basically a vertical supply chain protection strategy.
Following Cardinal’s increasing indebtedness and failure to pay the agreed settlement, Access Bank joined SEPLAT in its remedial action strategy to recover its loan from Cardinal.
According to available information Cardinal, in its response to Access Bank, noted that it was in discussions with SEPLAT on possible funding support.
Clause 6 of the Deed of Debenture on the loan facility granted to Cardinal allowed Access Bank the right to appoint a Receiver/Manager over the company’s assets if Cardinal failed to liquidate the Facility. On 12th October 2020, Access Bank appointed Kunle Ogunba & Associates to act as the Receiver/Manager.
On 13th November 2020, Access Bank filed a Court action against SEPLAT; Cardinal; a Seplat Director; and a Cardinal Director (the “Defendants”).
According to court proceedings, Access Bank asked the Court grant the following prayers: validate the appointment of Kunle Ogunba & Associates as the Receiver/Manager; validate the Receiver/Manager’s authority to take possession of the 4 Cardinal Rigs and other assets of persons and companies presumably connected to Cardinal drilling; restrain all Defendants from disposing or dealing with the Assets; declare that the Defendants have no right to enter into, or deal with, any of the Assets.
On 19 September, 2019, SEPLAT published a notified The Nigerian Stock Exchange and the investing public that due to expected business growth and in order to strengthen its operational effectiveness, the company would relocated all its offices in Lagos to one location.
In view of the above reasons, the head office and mailing address of the company changed from 25a Lugard Avenue Ikoyi, Lagos to 16a Temple Road (Olu Holloway) Ikoyi, Lagos.
By; Nnamdi M.
