Ecobank Nigeria has warned Flour Mills Nigeria (FMN) Plc not to proceed with its planned acquisition of 71.69 per cent of Honeywell Group Limited shareholding in the Honeywell Flour Mills Limited, (HFML) saying the company is indebted to its and facing winding-up proceedings.
The warning was contained in a letter through Ecobank’s counsel, Kunle Ogunba & Associates, to the Managing Director of FMN.
According to the letter, titled, “Purchase Of Honeywell Group Limited’s 71.69% Stake In Honeywell Flour Mills Limited – “Caveat Emptor”, there is a substituting Appeal Court judgement which approved the winding up of Honeywell Flour Mills by Ecobank, following the company’s failure to repay several loans advanced to it by the bank.
“Ecobank consequently averred that the planned acquisition of the Honeywell Group Limited’s 71.69% stake in HFM Limited by FMN is void as it is against provision of the Companies and Allied Matters Act 2020 “CAMA”, which states:
“Where a company is being wound up by the Court, any attachment, sequestration, distress or execution put in force against the estate or effects of the company after the commencement of the winding-up is void.”
The letter stated: “Based on the above, you will agree that it is indeed elementary that the estate or effects of Honeywell Group Limited includes (but is not limited to) its 71.69% stake in Honeywell Flour Mills Plc which it now seeks to divest to your good-selves; contrary to the express provisions of the law which prohibits the said sale/transfer or divestment during the course of the winding up proceedings.
“Consequent upon the foregoing it is indeed crystal clear that Honeywell Group Limited is legally estopped from sequestering and/or disposing any of its assets pending the final determination of the winding up action commenced against it; also of importance is the provision of “CAMA” (supplied above) that any such transaction is “void ab initio”.
“Consequently, we hereby demand that Flour Mills of Nigeria Plc in its best corporate interest immediately cease and desist from consummating the subject transaction which aims to divest the assets of a company being wound-up (Honeywell Group Limited).
“Please be further informed that the assets of both Honeywell Group Limited and Honeywell Flour Mills Plc are the subject of the winding-up action and thus based on the doctrine of “lis-pendens”(in addition to the provisions of CAMA supplied above) you are advised to refrain from dealing with the subject asset which forms part of the subject matter of litigation”.
Recall that Flour Mills announced recently that it has reached an agreement to buy 71.69% majority shareholding interest in Honeywell Flour Mills Plc based on an enterprise value of NGN80 billion. We await to see if this warning will affect the acquisition.
