United Bank for Africa (UBA) Plc has filed a winding up petition against Sahara Energy Resource Limited (Sahara Energy) at a Federal High Court in Lagos.
The petition was based on a N15 billion indebtedness of KEPCO Energy Resources Limited (KEPCO), which Sahara Energy had stood for as guarantor.
A winding up petition is a legal action taken by a creditor or against an insolvent company that owes them money. It can also be filed against a company that served as guarantors of the defaulter. If approved by the court, it will lead to a closure of or compulsory liquidation of all the debtor’s assets to repay the loan.
The petition was filed before Mohammed Liman, a judge of the high court, by Temilolu Adamolekun, UBA’s legal counsel.
UBA said that KEPCO obtained a loan with which it raised capital to fund the acquisition of Egbin Power Plant, operated by Sahara Power Group, a privately-owned power company under the Sahara conglomerate.
In 2013, the Nigerian government granted KEPCO, a Korean company, 70% stake of Egbin power plant at a sale value of $407.3 million, equivalent to N64.35 billion at the existing exchange rate.
In order to fund that acquisition, UBA said KEPCO had applied for a credit facility from several banks, including itself, with Sahara Energy standing in as a “corporate guarantor” to secure the loan.
FBN Capital Limited and First Nigeria Limited were appointed as the facility agent and security trustee respectively.
UBA had therefore granted KEPCO a loan to the tune of $35 million in August 2013.
The petitioner said KEPCO failed to meet its obligations even after it restructured the loan on two different occasions.
The interest on the rescheduled debt is said to have increased the facility to $42,282,430.49 or NN15,221,674,976.40 as of December 31, 2018.
The petitioner said Sahara Energy had been notified several times to fulfill its obligation as a guarantor but had not done so, hence the need to file a winding up order.
“The company herein is insolvent and unable to pay its debt. In the circumstances, it is just and equitable that the company should be wound up,” read a part of the petition.
The petitioner also sought “an order that the company, Sahara Energy Resources Ltd, be wound up by the court under the provisions of Companies and Allied Matters Act”.
Following an ex-parte motion filed by Adamolekun, the bank’s lawyer, Liman, ordered that the winding up petition be advertised in the Nigerian government’s official gazette and a national daily newspaper.