General Hydrocarbons Limited  Denies First  Bank $225  Million Debt Allegations

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General Hydrocarbons Limited  Denies First  Bank $225  Million Debt Allegations, Calls Allegations "Confusing".
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General Hydrocarbons Limited (GHL) has  denied allegations by First Bank of Nigeria (FBN) Plc  over an alleged $225 million debt,  calling the allegations  fraudulent and  baseless.
In a statement signed by GHL's  Chief Strategy and  Operations Officer, Abdelmuizz Bello, the company criticized recent media reports on the matter,  calling the allegations  "confused, baseless and malicious."
GHL  stressed that it was not indebted to FBN and had acted  in accordance with legally binding  agreements.
"The allegations of  misappropriation of monies advanced to GHL are therefore  extravagant and  baseless as  the payments were made by FBN directly to  the service providers after  review and approval by its credit and risk teams," Bello  said.
He further  explained: "Ultimately, FBN became a lender,  a risk  manager and  a conflict of interest operator when it  was involved in  the verification, approval and  payment of all invoices. At the same time, FBN approved and appointed a  Chief Financial Officer for GHL,  assuming full responsibility for all financial  disbursements."
Substitution Agreement and Financial  Obligations
According to Bello, GHL entered into a  substitution agreement with FBN on May 29, 2021. Under  the agreement, FBN  will finance the exploration and development of OML 120  by GHL in exchange for a 50% share of  the profits from oil  revenues for a period of eight years.
This profit-sharing arrangement, Bello  said, was designed to help FBN  resolve its non-performing loans (NPLs) and stabilize the bank's financial  position. He also  said that FBN's debt  came from  non-performing loans with Atlantic Energy, a company  that operates separate oil fields under  strategic alliance agreements.
"In its  bid to stay afloat, FBN sold the $600 million  loan as an Eligible Banking Asset (EBA), with  the support of GHL. The bank then  recovered the  money from the Asset Management Corporation of Nigeria (AMCON), using it to rebuild itself without  addressing GHL's needs," Bello  added. Court decisions and  allegations of  embezzlement
Citing a  decision of the Federal High Court in its favor, GHL  found that FBN  was restrained from  interfering with the  company's operations or appointing an alternative operator for OML 120. Despite this  decision, FBN  is said to have sought and obtained a Mareva injunction from another  court. freezing  the accounts of GHL.
Bello described this as a clear abuse of  legal process and reiterated that all payments to contractors and service providers involved in OML 120 were  reviewed and approved by  FBN's credit and risk  teams , rendering the embezzlement allegations  unfounded.
Operational challenges and  funding delays
GHL criticized  the FBN's failure to meet its funding commitments, citing delays in  the disbursement of approved funds that sometimes  stretched up to 70  days.
These delays  have disrupted operations,  resulting in significant financial losses. Service providers, including Schlumberger and Baker Hughes, were paid sporadically, leading to inefficiencies and arbitration against  GHL. Despite an initial disbursement of $185 million, FBN's refusal to provide additional  financing delayed the development of OML  120. GHL argued that the loan was not yet due for  repayment because it remained within the moratorium period specified in the  replacement agreement.
What you need to know
According to a leaked letter to Central Bank Governor Yemi Cardoso, the  dispute stems from an agreement between FBN and GHL  that was initiated during the tenure of Oba Otudeko, former  chairman of FBN Holdings  Plc.
In 2020, GHL partnered with FBN to develop OML 120 after the bank faced financial exposure from  non-performing loans related to Atlantic  Energy. The agreement was designed to revive  FBN's accounts, with profits from OML 120  being allocated to offset  unpaid receivables. GHL claims that FBN  has reneged on its obligations, delaying  payments and causing significant financial setbacks, including the loss of the Blackford Dolphin  drillship, for which GHL  is now  making claims  of more than $100 million in  arbitration.

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