Shareholders ’23 Returns Looks Bleak As Honeywell Loses N5.5Bn Dispute Case
BY FUNMI ALUKO
Shareholders fate for the current investment year 2023 looks uncertain as major confectionary products manufacturer, Honeywell Flourmills Limited is tied up in a major debt dispute repayment schedule.
This is coming on the heels of a major victory recorded against manufacturer at the Supreme Court where Honeywell and its sister firms, Anchorage Leisures Ltd and Siloam Global Ltd, individually and jointly lost a N5.5 billion debt dispute case against Ecobank at the Supreme Court.
The Supreme Court last Friday dismissed an appeal by Honeywell challenging the judgment of the Court of Appeal in a debt dispute with Ecobank Nigeria Limited. All the five Supreme Court Judges, led by Tijjani Abubakar, upheld the earlier judgment of the Appeal Court that Honeywell, Anchorage, and Siloam are indebted to Ecobank, and awarded the bank a compensation cost of N1million against Honeywell and its subsidiaries.
The Supreme Court in its lead judgment delivered by Justice Emmanuel Agim declared:
“I affirm the judgment of the Court of Appeal, setting aside the decision of the Federal High Court, granting the reliefs claimed for by the appellants (Honeywell).
“I hold that the appellants’ claim at the trial court fails and it is hereby dismissed.
“The appellants shall pay the cost of N1 million to the respondent (Ecobank),” Agim said.
By the instant judgment of the apex court confirming the indebtedness of the above named customers, Ecobank is expected to proceed to recover from the debtor-customers the total outstanding debt of N5.5billion including all the accrued interests from 2015 to date.
Honeywell Group Chairman, Dr Otudeko Oba, had in the wake of the legal tussle told the Court of Appeal that handled this case that the sum was owed by individual companies. These companies include Anchorage Leisures Limited, Siloam Limited, and Honeywell Flour Mills Plc. Otudeko had maintained that his companies paid N3.5 billion as at December 12, 2013, being the full and final payment for the N5.5 billion debt, purportedly agreed by the parties at a July 22, 2013, meeting.
On 6 August 2015, Honeywell and its sister firms, Anchorage Leisures Ltd and Siloam Global Ltd, dragged Ecobank before the Federal High Court Lagos to rule against the repayments of the N5.5 billion debt. In the suit, Honeywell and the others urged the Federal High Court to declare that “having paid the sum of N3.5 billion in cumulative settlement of their total outstanding indebtedness” (of N5.5 billion) to Ecobank, “they owned no further debt obligation” to Ecobank “arising from their banker-customer relationships.”
In addition, the plaintiffs asked the court to hold that Ecobank “was obligated to issue letters of discharge, release collaterals by which the prior indebtedness was secured.”
In addition, Honeywell and its sister companies begged the court to compel Ecobank to “update” their status on the “Credit Risk Management System Portal of the Central Bank of Nigeria.”
However, in its defence, Ecobank argued that an agreement was reached between it, Honeywell, Anchorage and Siloam on 22 July 2013, “for a definite settlement of N3.5 billion to be paid in terms of N500 million immediately and the balance of N3 billion before the exit of the CBN examiners from” Ecobank’s offices.
The bank also argued that the repayment agreement period was for six months as it rejected Honeywell and its sister companies’ request to “pay the balance over a one-and-half-year period in three equal half-yearly installments.”
The bank informed the court further that the debt repayment agreement “lapsed in August 2013.”
In the court’s ruling, the judge, Ayokunle Faji, upheld the arguments of the Honeywell Group and granted their prayers. Dissatisfied with the verdict, Ecobank in 2015 approached the Court of Appeal, which overturned the judgment of the Federal High Court, setting the stage for the Supreme Court’s appeal by Honeywell and co. which was resolved in favour of the bank.
Some shareholders who spoke with our reporter in confidence were worried that the development may dip investment dividends for the year, amid other harsh operating indexes.
Attempts to get reaction from the former President of the Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu on the development proved abortive as call to his telephone number did not connect.