Honeywell Flour Mills, a food and agro-allied company, has said it will continue to repay its credit facility to First Bank of Nigeria based on agreed terms.
This was disclosed in a statement by the Company Secretary of Honeywell, Yewande Giwa, on Sunday.
Recall that on Thursday, Central Bank of Nigeria sacked the Boards of First Bank Nigeria Limited and its holding company, FBN Holdco, citing insider abuse and corporate governance breakdown as reasons.
The CBN said the board’s move had a dire consequence for the bank and “portends significant risks to the stability of the financial system” in the query letter.
The apex bank said: “The CBN notes with concern that the action was taken without due consultation with the regulatory authorities, especially given the systemic importance of First Bank Ltd.
“The CBN was not made aware of any report from the board indicting the Managing Director of any wrong-doing or misconduct; there appears to be no apparent justification for the precipitate removal.
“We are particularly concerned because the action is coming at a time the CBN has provided various regulatory forbearances and liquidity support to reposition the bank, which has enhanced its asset quality, capital adequacy, and liquidity ratios amongst other prudential indicators.”
However, the CBN had instructed Honeywell to fully repay its obligations to First Bank within 48 hours, warning that failure to do so will prompt it to take appropriate regulatory measures against the insider borrower, Oba Otudeko, and the bank.
The CBN also noted that in four years, the bank was yet to perfect its books on the shares of Otudeko in FBN Holdco, which was used as collateral for the restructured credit to Honeywell Flour Mills, contrary to the conditions precedent for the restructuring.
According to Honeywell Group: “Concerning the credit facility with First Bank of Nigeria (FBN); over many decades, the company has had a long-standing, mutually beneficial credit relationship and continues to fulfill all its obligations to the Bank, and all its facilities are fully performing.
“Honeywell Flour Mills Plc has adequate security to cover its loan exposure and has not defaulted nor shown signs of distress.”
The company explained that since 1972, Honeywell Group and FirstBank of Nigeria have had a professional business relationship that preceded the Group’s investment in FirstBank over a decade later.
It said: “Honeywell Group’s relationship with FirstBank has always been professional, at arm’s length, and by all regulatory and industry practices and norms. The credit facilities which we have accessed from FirstBank and indeed other banks were granted after due negotiations with the necessary documentation and in line with regulatory policies and industry standards.
“Like most companies, Honeywell Group utilizes its equity and borrows from banks and other financial institutions to carry out its operations. Partnering with local and international financiers, we have a strong track record of mutually beneficial successes with our partners, based on honoring obligations and delivering returns to all stakeholders.
“By agreed terms, our facilities are adequately secured with First Bank, with collaterals in place at over 170% of Forced Sales Value and 230% at Open Market Value.”