SEPLAT not a party to Cardinal Drilling Services facility with Access Bank

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On Wednesday December 2, 2020, that the Corporate Headquarters of Seplat Petroleum Development Company Plc at No. 16A Temple Road, Ikoyi, Lagos were sealed and policemen, purporting to act on behalf of the allegedly appointed Receiver/Manager, prevented SEPLAT staff and other Tenants from entering the building. 

Investigation on this development shows that, subsequently SEPLAT received copies of the following documents: a letter dated 2nd December 2020 from Kunle Ogunba & Associates, alleging to be the appointed Receiver/Manager over the subject assets and attempting to exercise control over possession of said assets (Receiver’s Letter); and the Court documents filed by Access Bank against Seplat, Cardinal and other named Defendants (Court Documents).

A review of the above documents showed that SEPLAT’s Corporate Headquarters was sealed pursuant to an ex parte interim Court Order dated 13th November 2020, which was obtained by Access Bank Plc in connection with its Facility to Cardinal Drilling Services Limited.

Investigations also 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 (the “Debenture”). 

SEPLAT was not a party to the Facility or the Debenture and did not provide any guarantees or indemnities on behalf of Cardinal or otherwise in connection with the Facility. 

The Cardinal Rigs were used to provide drilling services to SEPLAT and other companies. In particular, 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.

Over the passage of time, Cardinal was unable to service the outstanding part of the Facility, which Access Bank show to be an outstanding amount of $85.8 million.

It was learnt that Cardinal and Access Bank had on 15th January 2019, agreed on a settlement of $45 Million, to be paid in two (2) installments by 31st December 2019. 

On 25th April 2019, Cardinal had failed to pay the 1st tranche of the settlement amount (i.e., $30 Million), which was due on or before 18th 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 threatened foreclosure on the Rigs. 

To date, SEPLAT has not made any binding commitment to Access Bank in connection with Cardinal’s indebtedness. 

Rather, SEPLAT merely sought to support settlement discussions between Cardinal and Access Bank, in order to retain its continued use of the Cardinal Rigs in ongoing operations.    

Following Cardinal’s increasing indebtedness and failure to pay the agreed settlement, Access Bank began to rope SEPLAT into its remedial action against Cardinal. 

Cardinal, in its response to Access Bank, stated that it was discussing with SEPLAT on possible funding support. 

Clause 6 of the Deed of Debenture allows Access Bank to appoint a Receiver/Manager over Cardinal’s assets, if Cardinal fails 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 (although named as “Seplat Petroleum Development Company Ltd”, which is a legal defect); Cardinal; a Seplat Director; and a Cardinal Director (the “Defendants”). 

Access Bank asked the Court to do the following: 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.

Seplat office was sealed without prior notice as required by law. Sealing the Temple Office is also a violation of the rights of the Owner and other Tenants of 16A Temple Road, who were unduly prevented from accessing the building;

The Temple Office is not one of SEPLAT’s assets, as SEPLAT is merely one of many tenants in the building. Therefore, any purported Court Order in relation to SEPLAT’s assets does not extend to the Temple Office. 

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