Oil and gas company, Seplat Energy Plc, has over N22 billion in Nigerian commercial banks that it can’t access amid a debt profile of about $700 million.
Both Access Bank and Zenith Bank have restricted cash worth N16.7 billion belonging to Seplat, while another N5.3 billion restricted cash balance is also not available for general use by the oil firm.
Out of the total amount restricted, Ripples Nigeria gathered that Seplat Energy has a deposit of N8.5 billion unilaterally restricted by Access Bank, with N8.2 billion locked away in Zenith Bank, as at June 30, 2021.
Why Seplat Energy can’t access the restricted funds?
According to Ripplesnigeria, Access Bank and Seplat are entangled in a legal tussle involving the oil and gas firm’s chairman, A.B.C Orjiako, Cardinal Drilling, and Kalu Nwosu, the former Managing Director of Cardinal Drilling.
Cardinal Drilling had obtained a loan from Diamond Bank for the procurement of four drilling rigs (CDS Rigs 101, 201, 202, and 203) between 2012 and 2014 – following the acquisition of Diamond Bank by Access Bank, the latter took over the debts and other liabilities of the former.
Access Bank sued Seplat as an outstanding loan of about $85.8 million could not be paid by Cardinal Drilling. The oil exploration firm accused the lender of violating the principle of law by suing Seplat and Orjiako who are not a party to the debt agreement.
However, Access Bank stated that Cardinal Drilling is a sister company and shell company of Seplat, with Orjiako being the promoter of the firm. It also claimed that Cardinal transferred the loan to Seplat.
The lawsuit led to Access Bank clamping down on the N8.5 billion deposited in it by Seplat, while the restricted N8.2 billion in Zenith Bank is penned down as a cash-backed guarantee “to fulfill the requirement of an order of the Court of Appeal, to seek the release of any order relating to the case between Seplat Energy Plc and Access Bank Plc.” the domestic oil firm said.
These deposits have been restricted at a period Seplat has an aggregate indebtedness of $755.2 million as at June 30, 2021, with total cash at the bank being $298.8 million, leaving its net debt at $456.4 million.