By Anayo Ezugwu
BUKKY George, founder, and chief executive officer, Health Plus Limited (HealthPlus), one of the leading pharmacy chain in Nigeria, has called on former President Olusegun Obasanjo to save her company from foreign investors that want to take it over by force. She alleged that Alta Semper Capital LLP (a UK private equity firm) and Leo Stan Ekeh, Chairman of Zinox Technologies Limited, are doing everything humanly possible to takeover working HealthPlus by all means.
In a private letter to Obasanjo on October 9, titled ‘HealthPlus Limited: Appeal for Urgent Intervention in a Case of Attempted Unlawful Hijack of Business Operations,’ George asked the former president to speak to Ekeh to let her and her company go. “Sir, my passionate appeal to you is to kindly use your good office to speak with Mr. Ekeh to let Health Plus Limited and I go. I have given my all to this business and it is totally unfair for a fellow Nigerian entrepreneur to collaborate with callous foreigners to hijack this business in an unlawful manner. I have no plans to surrender my business in this manner. Please save our souls!
“In addition, on behalf of all Nigerian entrepreneurs, I am appealing that you use your grand influence to catalyse the much needed changes in business financing in Nigeria. Policies need to be developed and laws passed in order to regulate the activities of Private Equity firms in Nigeria, especially the foreign ones. Founders and businesses must be protected from pitfalls associated with PE firms. We need to implement learning from developed and developing countries on financing SMEs in order to scale. We need to better invest the trillions sitting with our PFAs.
“The terms and conditions for accessing intervention funds from the CBN, BOI etc should be re-evaluated. The Cash Flows of a business should be recognized as an option for collateral (Grofin, the South African non-bank financial institution operating in Nigeria practices this, they Helped HealthPlus scale in the 2008-2009 economic recession). Intentional policies must be put in place for small and medium-sized businesses that employ hundreds and thousands of Nigerians to support their scale up in order to achieve their potential and ultimately enhance our economy. Entrepreneurship does not have to be this painful,” she said.
According to George, she grew HealthPlus from one small 18sqm store in GRA Ikeja in 1999 to 76 stores in 2018 when Alta Semper Capital LLP pledged Africa-focused, healthcare-focused, patient and flexible capital to take advantage of the opportunities in the marketplace in order to scale the business. “$18 million was pledged according to the deal announcement in Bloomberg on 15 March 2018. The investment into HealthPlus was to enable the company to capture the pent-up demand for high-quality yet affordable medicines, healthcare and beauty supplies; rapidly expanding the company’s footprint across Nigeria as well as developing a wholesale channel, investing in private label and e-commerce. The agreement stated that the partnership will be for at least 5 years, and I had a management agreement to be MD/CEO for the same period.
“The 1st tranche was for under $10m and this was paid up by mid-March 2018. The balance was due in 12 months (mid-March 2019). It has been 18 months and the 2nd tranche was never paid up despite dozens of promises by Alta Semper’s directors, Afsane Jetha and Zachary Fond. I was forced to put in my life’s savings into HealthPlus 12 months ago to keep the business going, this is separate from the fact that I had put up my home plus my personal guarantees as collateral for the business co-owned with Alta Semper. A very lopsided relationship indeed!
“In Q4 2019, six months after the 2nd tranche was due, Alta Semper promised to fund HealthPlus with $2m, a far cry from the $8m that was due. The excuse for the grossly inadequate pledge was that their Investment Committee only approved $2m with vague reasons. They proposed the inflow should come in as a convertible loan for speed sake as the business was in dire need of capital. Careful scrutiny of the convertible loan agreement showed several onerous terms: the loan will be interest free for two months, with interest rate of 20% per annum kicking in thereafter; collateral was 100% of my shares. I rejected this asking for straight equity.
“That was when the real intentions of Alta Semper became clear. They were changing critical terms in the original shareholders’ agreement. Negotiations hung. Alta Semper went mute. In May 2020, after 14 months of delayed funding, leading to inadequate inventory, dwindling sales, difficulties in meeting stakeholders obligations, eroding market share, eroded value, stressed management team and an attempt to remove me as CEO; I was constrained to file a petition to seek for minority shareholder protection against Alta Semper.
“Investigations revealed that the real reason behind Alta Semper’s inability to fund HealthPlus is because of the onerous terms Afsane Jetha signed with her own fund providers – the family office of Ronald Lauder (heir to the Estée Lauder Companies) and the family office of Dick Parsons (an American business executive, the former Chairman of Citigroup and the former Chairman & CEO of Time Warner/CNN). The plan was for Alta Semper to raise capital from Development Finance Institutions (DFIs) to swap with the capital from these family offices. Raising these cheaper institutional funds has been difficult to date, causing strangulation of Alta Semper’s portfolio companies that are due for funding and even delayed salary payments to Alta Semper’s employees. A reliable source said “Afsane needs to take responsibility for the terms she signed with her fund providers and stop allowing her employees and portfolio companies suffer.”
“Instead of owning up to its inability to fund and possibly inviting another investor to come in to dilute the two shareholders, Alta Semper directors resorted to delay tactics over several months. It became clear that Alta Semper wanted to use an established pattern to takeover the business from me. That takeover pattern has been used for several home grown brands as seen recently on Channels News when the Business Founders Coalition spoke out. PE firms pledge an amount, fulfill part, never fulfill the balance and watch the business go down. Working with local collaborators, they then stand by the door to buy over the carcass of the business for peanuts, then pump in money and grow the business for their benefit, often ruining the Founders. A classic example was the dispute between Chicken Republic Founder and DPI-LLP (a UK private equity fund, whose Co-Founding Partner & CEO, Runa Alam, is a mentor of Afsane Jetha, Managing Partner & CEO of Alta Semper.
“After the court papers were served to Alta Semper in May 2020, they asked for informal mediation but dragged this without resolution for over 3 months. The impasse frustrated my nominee director who resigned 5 weeks ago. On Thursday 24 September 2020, the Chairman nominated by Alta Semper resigned after calling to apologize to me for being unable to find a resolution to the impasse. The next day, Friday 25 September, without a board meeting (none had held in the last 8 months), Alta Semper directors (Afsane Jetha and Zachary Fond) issued a Press Release that a Chidi Okoro had been appointed as Chief Transformation Officer (CTO) and I remain a director and shareholder.
“This was how Alta Semper attempted to terminate my management agreement as CEO. Immediately following the press release, Alta Semper wrote on forged HealthPlus letterheads to the company’s Banks, Security Company, Suppliers and the Registrar of the Pharmacists Council of Nigeria, that there has been a change in leadership. So far, all these stakeholders have maintained the status quo because there was neither a board resolution nor approved minutes of board meeting to back Alta Semper’s claims. Alta Semper also wrote all HODs of the company to attend a meeting that day to meet the new CTO (who had made his way into the HealthPlus boardroom accompanied by the Alta Semper nominated CFO), but all HODs boycotted the meeting.
“Alta Semper’s failure to provide the 2nd Tranche has caused the company great travails. The shelves are scanty due to grossly inadequate inventory. We struggle to fulfil customers’ needs. This homegrown brand known for pharmaceutical excellence has been severely battered. So much value has been eroded. My home, personal guarantees and reputation are all at stake. This is not what the partnership between Alta Semper and HealthPlus was supposed to be about.
“At this point, it is important to note the role of Mr. Leo Stan Ekeh, Chairman of Zinox Technologies Limited and Chairman of Konga in this saga. He had called me to his office about 2 months ago, telling me to drop the case against Alta Semper. He informed me that he wants to invest $1.5m into Alta Semper and that Alta Semper’s investors in New York want to invest $10m in Konga. I now know from reliable sources that the New York investors promised Konga $10m if Mr Ekeh solves the Alta Semper-HealthPlus-Bukky George problem in Nigeria. It was Mr. Ekeh, who found Chidi Okoro as CTO. Mr. Ekeh is renowned for not playing by the rules. I have been told that he master-minded the attempted hostile takeover, causing Alta Semper directors to violate COVID-19 restrictions rules (they arrived in Nigeria on Wednesday, 23 September 2020 and attempted takeover at HealthPlus’ head office the following Friday without observing the required quarantine period); violate immigration regulations (they entered the country with Visa-on-Arrival and should not parade themselves as executive directors; violate corporate governance and Court processes.
“While the Alta Semper officers have left the shores of Nigeria, they are still working with local collaborators to bring the operations of HealthPlus to a standstill. They keep emailing the banks, suppliers and other service providers directly and through their lawyers to surrender to their leadership. On Thursday, 9 October 2020, two detectives in the company of a white man (who had come with Alta Semper officers on Friday, 25 September 2020 to take over the company) served me an invitation letter from the Force CID, Abuja. I am aware that the plan was to cart me away to Abuja so they can take-over operations, but this plan was foiled.”
– Nov. 18, 2020 @ 17:15 GMT |