…Boardroom Squabble Threatens N350bn Recapitalisation Plan
…Shareholders Ask Parties To Sheathe Sword, Differ On CBN’s Role
For FBN Holdings Plc, parent company of 130-year old FirstBank, Nigeria’s oldest surviving bank, these are not interesting times, amid fear among minority shareholders following the raging fierce battle for ultimate control of the institution that once played the role of the country’s central bank prior to 1959. for majority ownership and control of the behemoth, believed to have recently consumed Dr. Sulaiman Adeduntan, the immediate past managing director/chief executive of FirstBank, is an unresolved disagreement by some of the country’s richest and fiercest boardroom czars.
In the ring are the combination of Obafunke Otudeko, former chairman of the group and longest serving member the board; his successor, and billionaire chairman of Geregu Power Plc, Olufemi Otedola, and the Hassan-Odukale family/Leadway Assurance Group that have reported held stake in FirstBank for over two decades. It is not yet known on which side of the divide Dr. Mike Adenuga Jr., chairman of telecommunications giant, Globacom, is on.
The ongoing fisticuffs through proxies have already resulted in the postponement of FBN Holdings’ all-important annual general meeting originally slated for last Thursday, August 22, 2024, the second in two years through a pile of lawsuits.
At the AGM, the board is seeking shareholders’ approval to raise N350 billion needed to help it meet the CBN’s minimum capital requirement for banks with international flavour.
After weeks of delay, the board of FBN Holdings, on August 1, 2024, initially announced August 22 as date for its AGM, before the postponement to September 3, amid the boardroom rumble.
As part of the special business proposed at the meeting, shareholders are required to approve the capital raise of up to N350 billion “through the issuance of shares, by way of a public offering, private placement, rights issue in the Nigerian or international capital markets, at price(s) to be determined by way of a book building process or any other valuation method or combination of methods, in such tranches, series or proportions and at such periods or dates, coupon or interest rates, within such maturity periods and upon such other terms and conditions as may be determined by the board of directors, subject to obtaining the approvals of the relevant regulatory authorities.”
Reacting to the protracted squabble, which they agree is complex, there is a consensus among vocal minority investors and leaders of shareholder groups on the need for a high level dispute resolution mechanism among the warring parties.
Adebayo Adeleke, investment analyst, entrepreneur, shareholder activist, and former General Secretary of the Independent Shareholders Association of Nigeria (ISAN), described the FBN Holdings debacle as complex and unfortunate, while lamenting the way “it is getting protracted and may seriously impact on the fortunes of the institution negatively.”
He regretted that “FBNH is no longer among the first three biggest banks in Nigeria. One can only make an appeal that the actors don’t give their dinner to cats.” When elephants fight, he continued, “The grass suffers. Minorities are not comfortable with this development.”
Adeleke urged the Securities & Exchange Commission (SEC) and the Central Bank of Nigeria (CBN) as primary regulators of both the capital market and the banking industry to wade in, while being impartial arbiters, whose primary aim is genuine reconciliation.
For him, a winner-takes-all approach, he warned, would only prolong the crisis and make it messier, even as there are a litany of court cases that continues to stall the progress of the financial powerhouse.
Already, he told Daily Independent that many fraudulent staff have taken advantage of the distraction to commit what he described as “monumental fraud” at the legacy institution “that is older than all the current actors. “We must all ensure its survival and prosperity as unborn children would own it tomorrow”.
Ambrose Omordion, an investment analyst and Chief Research Officer at Investdata Consulting Limited, believes the regulators are watching developments at FBN Holdings with the keen interest it deserves given that the flagship banking subsidiary is a very systematically important player in the nation’s financial system.
He agrees with Adeleke that there is need to settle out of court for the good of all so that the company will make a headway if they all truly love the FBN brand as they claim.
It is very sad, he continued, that the company cannot go ahead with its capital raising activities, or even pay dividend proposed for the period ended December 31, 2024, unless they go ahead and pay like just as they did last year.
“Let the big shareholders come to a roundtable to discuss the knotty issues with open minds, because as long as the impasse continues, it is the minority shareholders that are suffering,” Omordion told Daily Independent.
Proffering solutions to the current development at FBN Holdings, Boniface Okezie, National Coordinator of the Progressive Shareholders Association, insisted that the involvement of the CBN should be limited. “It is not a regulatory issue,” he argues, expressing belief that the registrars of FBN Holdings (Meristem Registrars) and the Central Securities Clearing System Plc, the central custodian of the nation’s capital market are key to resolving the disagreement and resolving the shareholding of the various parties.
The SEC, he continued, should only wade in “to resolve whatever disparity may exist on shareholding. But for me, there shouldn’t be anything of such, because what you bought must be credited to you.
That is where Meristem Registrars and the CSCS should produce the authentic records of the holdings of everybody in the company. “If both CSCS and Meristem Registrars of the company can confirm what Babican Limited (one of the litigant shareholders) holds, that settles the matter. “It is now left to SEC to order them to respect the records as presented by the Registrars.
That will pave the way for an amicable resolution of any issues that may arise, after which SEC should order the annual general meeting to go-ahead by approaching the court to allow it handle the conflict as regulator, rather than the CBN.”
The CBN, he continues, “Can only be involved if it is on a fresh offer to look into verification of shares before allotments. Rights issue is in the purview of the SEC.”
Mr. Olufemi Otedola, he stressed, has the opportunity to purchase more shares from the market to outdo other contenders, if he wants to hold the majority stake.
The market is there for anyone to buy as many shares as he wants from FBN Holding Plc to remain the biggest shareholder in the register, just as the former chairman, Oba Otudeko, through his company, Babican Limited, can also do likewise by buying more if he so desires to do same.”
Speaking with Daily Independent on phone, Mrs. Adebisi Bakare, President, Pragmatic Shareholders Association, a minority investors’ pressure group, lamented that the boardroom tango FBNH continues to leave sour taste in the mouth of most stakeholders. She urged the warring parties to remember that “FBN Holdings is bigger than everyone of them.
They should consider the plight of all stakeholders, and that if anything happens to the company, it will adversely affect the Nigerian financial system and have a ripple effect on the economy.”
Bakare agreed on the urgent need for a roundtable meeting to enable the corporate titans who are elders sort whatever bottlenecks are holding down the once flourishing group for several years, leading to the intervention of the CBN some years ago that led to the dissolution and appointment replacements on the board of the holdco and First Bank of Nigeria Limited. “It is sad that FBN Holdings is not where it ought to be today,” she stressed, wondering why those who have benefitted from the bank in one way or another are seemingly undoing it by their actions.
Also speaking on the lingering feud, a source who craved anonymity, noted that the plethora of court cases seem to have helmed the regulators in, having dragged the SEC and the Corporate Affairs Commission (CAC) into the fray.
The litigants in the various suits both at the Federal High Courts and Court of Appeal want resolutions reached at the company’s 2023 AGM declared a nullity, and to halt actions that might undermine their interests, or jeopardise their rights as shareholders if the capital raising exercise is allowed to hold.
How the issue is handled and what manner of concession the warring parties are ready to make especially at this time, our source believes will determine what becomes of Nigeria’s oldest financial institution. (Daily Independent)
