Court halts sale of 9mobile as shareholders demand $43.3m refund

Justice

Justice Binta Nyako of the Federal High Court, Abuja, Wednesday stopped the planned sale of 9mobile (formerly Etisalat Nigeria) following the opposition to the transaction raised by some aggrieved shareholders of the company.

9mobile, in search of viable buyer

9mobile, in search of a viable buyer

Justice Nyako gave the order stopping the sale while ruling on an ex parte motion brought by the shareholders.

One of the companies said to be a shareholder in 9mobile and is a plaintiff in the suit, is owned by Katsina businessman, Alhaji Dahiru Mangal.

The order by the court will put a spanner in the bid by Teleology, which emerged preferred bidder in the sale process for 9mobile.

Teleology last month paid a $50 million non-refundable deposit for 9mobile and was given 90 days to pay the balance of $450 million to conclude its acquisition of the telecoms firm.

But Afdin Ventures Limited and Dirbia Nigeria Limited, who claimed to be “major investors” in Etisalat Nigeria, which was renamed 9mobile after the company’s Abu Dhabi-based investors – Etisalat Group – exited the Nigerian telco last year, complained of being left out in the firm’s decision making and are demanding a refund of their investment in 9mobile to the tune of $43,330,950.

The suit marked: FHC/ABJ/CR/288/2018 has Karlington Telecommunications Ltd, Premium Telecommunications Holdings NV, First Bank of Nigeria Plc, Central Bank of Nigeria, Etisalat International Nigeria Ltd and Nigerian Communications Commission (NCC) as defendants.

Ruling on the ex parte moved by plaintiffs’ lawyer, Mahmud Magaji (SAN), the court held that “an order is made for the maintenance of status quo as at today”.

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Justice Nyako, however, added that the defendants ought to be heard and consequently ordered the service of processes on the defendants, including the 3rd and 5th (First Bank and 9mobile/Etisalat), whose addresses are outside the jurisdiction of the court.

The court, in addition, ordered that “the writ be marked as concurrent” and adjourned to May 14 for a mention.

In a statement of claims, the plaintiffs said that they bought shares in Etisalat from the 1st and 2nd defendants (Karlington Ltd and Premium Holdings) through a private placement memorandum in which the 3rd defendant (First Bank) served as the custodian of the plaintiffs’ share certificates.

According to them, the 1st plaintiff (Afdin Ventures) bought 1,300,391 Class A Shares at $13,003,910, which it paid for on Aug. 14, 2009; the 2nd plaintiff (Dirbia Ltd) acquired 3,300,004 Class A Shares at $30,030,040, for which it made payment on September 3, 2009.

The plaintiffs said they paid for the shares through the 1st and 2nd defendants’ First Bank accounts.

In a supporting affidavit, the general manager of the 1st plaintiff and a director in the 2nd plaintiff, Sani Ibrahim, claimed that the problem with 9mobile resulted from the mismanagement of its funds.

He said the plaintiffs’ grouse arose from not only the firm’s mismanagement but its inability to declare dividends from 2009 to date and the attempt by the defendants to conduct a clandestine sale of the company to the detriment of the plaintiffs.

Ibrahim stated that in 2015, the 1st, 2nd and 5th defendants took several loans from 13 Nigerian banks with a view to expanding and boosting their telecoms business, but the money was not properly utilised, leading to heavy indebtedness by 1st, 2nd and 5th defendants.

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He added that owing to the resultant indebtedness, the 1st and 2nd defendants rebranded the 5th defendant (Etisalat) and changed its name to 9mobile with a view to selling it off and obtaining money to pay its numerous debts.

According to Ibrahim, “The 1st, 2nd, 3rd and 5th defendants have failed to declare dividends on the shares of the plaintiffs since 2009 till date.

“The 1st, 2nd, 3rd and 5th defendants have completed arrangement to sell the rebranded 9mobile to Smile.Com and Glo Network, among others, without the knowledge of the plaintiffs, who are its major investors.

“If not restrained, the 1st, 2nd, 3rd and 5th defendants will sell Etisalat Nigeria (also known as 9mobile) and disappear with the plaintiffs’ investment.”

The plaintiffs want the court to, among others, declare that the planned sale of 9mobile without paying the plaintiffs the money that they invested in the telecoms firm is unlawful.

They also urged the court to order the 1st, 2nd, 3rd and 5th defendants to refund to the plaintiffs the sum of $43,330,950 with which they bought 4,303,395 shares at $10 per share.

The plaintiffs equally prayed the court to award N1 billion in general damages against the defendants and in their favour.

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