The Bid Offer that Failed

Fri, Mar 22, 2013

By publisher

4 MIN READ

The National Council on Privatisation terminates the offer it gave to the BFI Group Corporation to purchase majority shareholding in Aluminium Smelter Company of Nigeria in Akwa Ibom State

|  By Maureen Chigbo  |  Apr. 1, 2013 @ 01:00 GMT

DESPITE the reprieve the embattled BFI Group Corporation got at the Supreme Court of Nigeria last July over the ownership of Aluminum Smelter Company of Nigeria, ALSCON, the company is still out of its reach. The National Council on Privatisation, NCP, on March 19, terminated its offer to purchase 77.5 percent of ALSCON.. This is because the BFI Group Corporation failed to pay the agreed 10 percent of the offer price within 15 working days of the execution of the Share/Sales Purchase Agreement, SPA, as directed by the Supreme Court.

The deadline for the execution of the SPA and payment of the 10 percent of the offer price elapsed midnight March 18. As at that date, the BFIG had neither executed the SPA nor made the initial mandatory 10 percent of the bid amount.

The Supreme Court in a July 6, 2012, judgment awarded ALSCON, located in Ikot-Abasi, Akwa-Ibom State, Nigeria, to BFIG Corporation.

In compliance with that judgment, the Bureau of Public Enterprises, BPE, transmitted an offer letter and the Share Sales/Purchase Agreement, SPA, in respect of ALSCON to the BFIG. This followed the directive of the National Council on Privatisation, NCP, chaired by Namadi Sambo, vice president, which met at the Presidential Villa, Abuja, January 22.

The BFIG, the plaintiffs, in the suit at the Supreme Court, was expected to execute the Share Sales/Purchase Agreement, SPA, and pay the agreed 10 percent of the offer price of $410 million (which is $41 million) within 15 days of the execution of the SPA as directed by the Supreme Court. The BFIG, in total disregard of the apex court, drafted and executed an agreement that was different from the one ordered by the Supreme Court.

It would be recalled that Nigeria’s apex court had stated, among other decisions, that: “an order of specific performance is hereby decreed mandating the respondent  to provide the mutually agreed share purchase agreement for execution by the parties to enable the plaintiff pay the agreed 10 percent of the accepted bid price of $410 million (i.e, the sum of $41 million) within 15 working days from the date of the execution of the Share Purchase Agreement in accordance with agreement dated 20/5/2004 and the 90 percent balance of bid price shall be paid within 90 calendar days. It is declared that the defendant is bound to accept payment of 10 percent of the bid price from the appellant (BFI Group Corporation) within 15 days from the date of signing the share Purchase Agreement (SPA) by the parties.”

The financial bid opening for the privatisation of ALSCON was held on June 14, 2004, and the BFIG emerged the preferred bidder with a bid offer of $410 million subject to the approval of the NCP. The federal government approved their bid and on June 17, 2004, the Bureau of Public Enterprises, BPE, conveyed the approval of the federal government to the BFIG Group.

In the letter, the BFI Group was unequivocally informed that it had 15 working days from the date of receipt to pay 10 percent of the bid price. The group received the letter on the same date, that is, June 17, 2004. Negotiation for the execution of the Share Sale/Purchase Agreement was scheduled for June 18, 2004. However, at the instance of the BFI group, it was postponed to June 21, 2004.

Negotiations were subsequently held between officials of the BPE and the BFI Group where a final agreement was reached but the BFI Group was not available to sign the SPA. The 15 working days expired by 12 midnight of July 8, 2004, but on that day the BFI Group applied for 10 working days’ extension to enable it pay up the 10 percent of the bid price. The BPE forwarded the request to the government, which eventually turned down the application. The BFI Group subsequently sued the BPE at the Federal High Court, Abuja, challenging the decision of the BPE to cancel its status as the preferred bidder.

A statement signed by Chigbo Anichebe, head, Public Communications, BPE, said it was important to state for the records that the BPE relied on the Supreme Court judgement on the price and timeline for the decisions it made on the case. The BPE, as a responsible agency, complied every step of way with the court judgement, it said.