Access Bank chases Diamond Bank’s $85.8m legacy debt to Orjiako, SEPLAT, Cardinal Drilling, Nwosu

Access Bank Plc, Nigeria’s biggest lender, which assumed that position following its merger and acquisition deal with former Diamond Bank, is continuing its quest to clean up the Aegean stable of legacy issues brought upon it by the merger, especially outstanding debt the latter consummated

The bank is now horn-locked with Ambrosie Bryant Chukwueloka (ABC) Orjiako, the chairman of Seplat Petroleum Development Company, SEPLAT itself, Cardinal Drilling Nigeria Limited, another company associated with the businessman, and Kalu Nwosu, managing director of Cardinal Drilling Nigeria Limited,  over an indebtedness put at $85.8 million as at last week.

The matter, now in court, led to the sealing up of SEPLAT’s corporate headquarters at 16A Temple Road, Ikoyi, Lagos last week, following a court injunction obtained by Access Bank and executed by its appointed Receiver/Manager, Kunle Ogunba & Associates. Defunct Diamond Bank had been plagued by huge debts owed it by individuals and corporates and had been saved by the M&A option offered by Access Bank. It is now emerging that this debt involving Cardinal Drilling Nigeria Limited is one of the debts that the management of Diamond Bank could not disentangle.

Access Bank is known to be very aggressive in its debt recovery and following its acquisition of Diamond Bank last year, its management had sounded the warning that it would be pursuing all legacy debts assiduously, which some analysts say may be what is now playing out in this ABC Orjiako, SEPLAT and Cardinal Drilling case.

The details of this current debt situation relate to a facility taken by Cardinal Drilling to execute some jobs of which SEPLAT was a direct beneficiary.   

According to information obtained by Business A.M. the debt was contracted in 2012 from Diamond Bank (now Access Bank) by Cardinal Drilling Services Limited. The loan was used to purchase four rigs, which in court papers are identified as Rigs 101, 201, 202 and 203.

Court documents further show that Cardinal Drilling secured the loan with a fixed and floating Debenture over its assets, which became the debenture.

According to the documents, the Cardinal Rigs were subsequently used to provide drilling services to SEPLAT, thereby directly benefitting from the deployment of the rigs, which the loan was used to provide.

In the court filings, it was especially stressed that CDS 101 and 201, two of the rigs, were deployed into operation for the 2019 SEPLAT’s work programme, and all the four rigs purchased with the loan were said to be critical to SEPLAT’s future drilling plans, the reason why Access Bank is believed to be going after the oil company and its principal, ABC Orjiako.

Trouble started when Cardinal Drilling could no longer service the loan, which is now calculated to be in the region of $85.8 million.

However, SEPLAT denies that it is a party to the loan and wants to be exempted from it, having been obtained by Cardinal Drilling Services; and that it did not provide any guarantees or indemnities on behalf of the company. But this argument is countered by sources familiar with the case that such a claim is only tactical and a part of the intrigues used to avoid paying back bank loans.

In the filing made by Access Bank that Business A.M. has seen, it is insisting that there is inter-company relationship between SEPLAT and Cardinal Drilling as both companies are jointly promoted by Orjiako.

“SEPLAT is a sister company to Cardinal, jointly promoted by Orjiako who is the alter ego of the two companies,” the bank insists.

Access Bank has also joined Kalu Nwosu, who is said to have issued a personal guarantee and a statement of personal net worth as security to the facilities availed to SEPLAT.

The bank is also drawing the court’s attention to the fact that SEPLAT has solely enjoyed all the benefits of the facilities granted Cardinal Drilling to its advantage and wholly for the promotion and advancement of its businesses, and it further noted that “SEPLAT is in fact the ‘real debtor’ while Cardinal is merely a ‘vehicle smokescreen’ for the purposes of the subtle obtainment of credit facilities by SEPLAT”.

While it is being put forward that SEPLAT is a separate business, it is being alleged that in certain instances legal means are often deployed to prevent banks from getting title documents used as guarantees for credit facilities, adding that this in part, contributed to the loan problems faced by defunct Diamond Bank.

Access Bank in its court documents showed that Clause 6 of the Deed of Debenture allows it to appoint a Receiver/Manager over Cardinal’s assets, if Cardinal fails to liquidate the loan. On 12th October 2020, Access Bank appointed Kunle Ogunba & Associates to act as the Receiver/Manager.

The bank, therefore asked the court to validate the appointment of Kunle Ogunba & Associates as the Receiver/Manager; validate the Receiver/Manager’s authority to take possession of the four 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.