The Honeywell Group owned by the business mogul, Dr. Oba Otudeko has reacted to the directive of the Central Bank of Nigeria (CBN) regarding an alleged breach of corporate contract in securing a loan said to be up to the tune of N77 billion from First Bank of Nigeria LTD.
The New Diplomat had reported that the CBN issued a 48-hour ultimatum to Honeywell Flour Mills Plc to fully repay the loan obtained from First Bank.
According to reports, Otudeko-owned Honeywell Flour Mills reportedly obtained the sum of N77 billion from First Bank. It was reported that his company had paid N40bn of the loaned sum. However, the apex bank had expressed concerns over the issuance of such insider’s loan to the company owned by Otudeko.
According to the CBN, First Bank might not have performed due diligence regarding the collateral agreement with Otudeko’s company before granting the credit facility.
A memo dated April 26, 2021, issued by the CBN claimed Otudeko’s Honeywell Flour Mills allegedly got special treatment to get the said loan from First Bank.
In the memo, the apex Bank had stated that there was no legal/binding documents signed between the two parties regarding the collateral, of which will allow First Bank to claim the collateral should the loanee fails to repay the loan.
Following the development, the CBN directed the business mogul to repay the said loan in 48 hours which elapsed on April 28. The CBN had also threatened to take appropriate regulatory measures on Otudeko and First Bank, should the former fail to repay the loan within the stipulated deadline.
But the Honeywell Group has come out to say the loan facilities obtained from First Bank was “granted after due negotiations, with the necessary documentation and in line with regulatory policies and industry standards.”
According to the group, the loan facilities obtained from First Bank have been performing and that the bank has been earning significant interest from them, contrary to the report of the CBN that the loan is non-performing.
The Honeywell Group in a statement further explained that since 1972, the company has maintained a professional business relationship with First Bank.
The statement reads, “Honeywell Group’s relationship with First Bank has always been professional, at arm’s length and following all regulatory and industry practices and norms. The credit facilities, which we have accessed from First Bank and indeed other banks, were granted after due negotiations, with the necessary documentation and in line with regulatory policies and industry standards.
“We have serviced all our credit facilities in line with the terms agreed with First Bank and at no point have any of these facilities been non-performing.
“In 2015, First Bank under the directive of the Central Bank of Nigeria (CBN), drew our attention to a 2004 circular (BSD/9/2004) which requires that insider-related facilities must not exceed 10 per cent of paid-up share capital. Based on this directive we subsequently entered negotiations with the bank to agree an appropriate repayment structure and the final negotiated position was duly approved by the CBN.”
