Why we terminated pact with BFIG over ALSCON, by BPE
CONTRARY to sundry allegations and claims, the Federal Government terminated the transaction with the BFI Group over the Aluminium Smelter Company of Nigeria (ALSCON) because the group defaulted in paying for the bid price.
Also, the deal was stopped because BFI Group did not sign the Share/Sale Purchasing Agreement (SPA) before the July 8 deadline.
These were the reasons adduced by the Bureau for Public Enterprises (BPE), for terminating the offer for ALSCON two weeks ago.
They were contained in a statement issued yesterday by the Head of Communications and Marketing of the BPPE, Charles Odenigbo in reaction to the avalanche of attacks on the agency by the BFI Group over the matter.
The BFI Group had reportedly alleged among others that it was not given a fair deal by the BPE before the bid offer which it won last month was withdrawn for its alleged failure to sign the SPA and pay the required 10 per cent of the bid price of $410 million.
Explaining the reasons for terminating the transaction, BPE said a letter dated June 17, 2004 conveying the approval of the NCP for the BFI Group to acquire some shares of ALSCON at the bid price of $140m also requested that 10 per cent of the bid price be paid within 15 working days from the day of receiving the letter.
The letter also invited the corporation to begin negotiating the final terms of the SPA before the opening of the final bid.
The negotiations began on June 21 and the copy reflecting the mutually agreed correction was prepared but the corporation was not ready to sign the SPA because its chairman Dr. Rueben Jajo was not available.
The statement reads in part: "On 28 June, 2004, Mr. Thomas M Crehan, the General Counsel to the Corporation wrote from the US to seek for clarification on the effective date of the 15 working days. He thought that the period started to run from 21 or 22 June 2004 when negotiations commenced.
"On June 30, 2004, BPE promptly replied, quoting the relevant portions of the letter dated June 17, 2004 where it was unequivocally stated that the 15 working days started to run from the date of the receipt of the letter, that is, June 17, 2004 when the letter was delivered to the corporation.
"On Monday, July 6, 2004, Dr Amana of the Corporation called to the effect that they were ready to sign the SPA. A final copy of the SPA reflecting the corrections was sent to them for confirmation. They were also requested to send a soft copy of the Strategic Business Plan as required by Clause 9.5 of the SPA as an annexure to the SPA.
"Furthermore, Clauses 4.2.3 and 9.19 of the SPA provide that they should produce a copy of the Technical and Marketing Agreement with Daewoo International of America.
"There was no way that the SPA could have been signed without these requirements. Unfortunately, there was no response from the Corporation till the afternoon of July 8, 2004."
The BPE continued: "The 15 working days were due to expire by midnight of the July 8, 2004. However in the afternoon of July 8, 2004, Jajo arrived BPE with his Nigerian Legal Adviser, Mr James Essien and Amana with a letter dated July 6, 2004 from their general counsel, Mr Crehan stating, among others;
- that the Directors of BFIGroup Corporation had approved the SPA as modified and authorising Amana and Essien to sign the SPA on behalf of BFIGroup;
- that the funding partners have firmly indicated that providing for deposit of the initial 10 per cent payment of $410m in an escrow account in a neutral country had become essential in view of the mixed signals, the Nigerian government had expressed since the June 14, 2004 financial bid opening;
- BFIGroup has commitments for the full amount of the $41m, much of it is conditioned upon the funds being paid to such an escrow. However, if there is no agreement on an escrow, it is possible but not likely that BFIGroup will be able to make the initial payment by the July 8 due date; and
- BFIGroup and BPE should be able to set up an appropriate escrow account within 10 working days to permit the $41m to be promptly transferred.
The BPE said that on the presentation of this letter, the BFIGroup expressed the wish to sign the SPA but were reminded that they were yet to forward the soft copy of the Strategic Business Plan and a copy of the Technical and Marketing Agreement with Daewoo International of America in the absence of which the SPA could not be signed.
BPE re-stated that the availability of these documents were crucial to the execution of the SPA.
The Director-General clearly told the Corporation that they had up till midnight of that day, that is, July 8, 2004 to pay.
The statement reads further: "At this point, Jaja and his other officials left and returned with a letter wherein they re-stated the effect of adverse publicity on their ability to pay the 10 per cent of the bid price and requested for 10 working days extension from July 8, 2004 to pay up."
But the government directed that if the Corporation was unable to pay the first instalment of the bid price as and when due, the consequence was that they had defaulted and the rules be applied accordingly.
The Government also rejected the request for extension of time within which to pay the 10 per cent of the bid price.
According to the BPE, when officials of BFIGroup returned to the BPE office to know if their request for extension was granted and to ask to be allowed to sign the SPA, they were told that since they had defaulted in paying, that was the end of the transaction.
Also, because the BFIGroup did not sign the SPA before July 8, 2004 they did not meet one of the conditions for the continuation of the transaction.
