Aiteo Eastern E&P Company has been sued by seven Nigerian banks, as well as Shell Plc and Africa Finance Corporation, over a $2 billion loan used to buy a stake in Nigerian oil fields and facilities.
Aiteo borrowed the money through two agreements dated September 2, 2014, to buy oil infrastructure in the country, including Shell’s OPL 29.
Ecobank Nigeria Limited, Fidelity Bank plc, First Bank of Nigeria Limited, Guaranty Trust Bank plc, Sterling Bank plc, Union Bank of Nigeria plc, and Zenith Bank plc are among the seven Nigerian banks.
AFC and the banks, known as “onshore lenders,” provided about 75% of the finance under a Nigerian-law regulated facility agreement known as “the Onshore Facility Agreement.”
The remainder came from Shell in the form of vendor financing, which was branded “the Offshore Facility Agreement” and was controlled by English law.
The parties began communicating in October 2018 about sums that the lenders claimed were due to them from the borrower, and on August 19, 2019, the lenders accused the borrower of breaching the agreements and demanded that the borrower correct them.
In a letter issued to the lenders on September 10, 2019, the borrower denied that any funds were due, while the lenders’ Nigerian solicitors, Aluko & Oyebode, filed a letter requesting payment of the outstanding debt within seven days on October 23, 2019.
Eight days later, Aiteo filed a lawsuit in the Nigerian Federal High Court against the lenders and four other parties, requesting that the court declare it not liable as claimed in the demand letter.
The claim was based on allegations of force majeure, which led to the borrower’s requests to restructure the facility agreements, it was discovered.
Aiteo maintained that there was no default because the lenders refused to restructure, and he later got an order from a Nigerian court barring the banks from pursuing legal action.
The defendants sought an order dismissing the borrower’s lawsuit after appealing the court’s injunctions.
Meanwhile, an English high court has declared that Shell Plc, AFC, and the seven Nigerian banks have the legal authority to stop Aiteo Eastern E&P Company Limited from pursuing legal action against them.
A British court determined on April 1 that Aiteo cannot sue the claimants because their lawsuit against the oil company is still pending.
Aiteo had asked the court to overturn the ex parte temporary anti-suit order.
The claimants argued in written evidence that the loans were “systemically important loans within the Nigerian banking system” because they were “extremely large amounts” and “represent significant credits on the books of the Onshore Lenders, and a default under the loans would be a very serious matter for each Lender.”
For a variety of reasons, according to the court filings, no progress was made with the Notice of Appeal. There were two adjournments in early 2020, and court sessions were postponed from March 24 and May 4 due to COVID 19. According to the statement, the high court and court of appeals would only resume full operations on September 28, 2020.
By October 2020, one of the claimants stated that it was becoming evident to all lenders that the negotiations were stalled, and that while some lenders remained hopeful that the restructuring would be successful, others began to mistrust it.
A failed attempt by the CEO of Sterling Bank, one of the lenders, to break the impasse with the borrower on November 23, 2020.
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