11 FEBRUARY 2013Businessdayonline.com
Distortions on share purchase agreement may delay negotiations on ALSCON
Edited by : AL CIRCLE
2 min read
The on-going negotiations on the sale of the Aluminium Smelter Company of Nigeria (Alscon) Ikot Abasi in Akwa- Ibom State, between the Bureau for Public Enterprises (BPE) and BFIG is tilting towards the rocks, due to alleged distortions on the mutually agreed Share Purchase Agreement (SPA), the document certifying the transaction between the seller and buyer of the company.
According to BFIG, the court ordered winner of the bid for ALSCON, there were marked differences in the SPA that was mutually agreed to by both parties in October last year and the final document sent on January 29 for execution and payment.
“We have received the supposed BPE’s SPA and found it violently in defiance to the Supreme Court order and decree of July 6, 2012 that asked the two parties to enter into a mutually agreed SPA to enable BFIG pay the agreed amount,” said Frank Scherer, Executive President, Public relations, BFIG
Negotiation commenced last year between the two parties, based on the Supreme Court ruling of July 6 last year, which declared BFI Group as the original buyer of the aluminium company and compelled the BPE to discuss with the Group. The ruling also compelled the two parties to have a mutual agreement on the sale.
Further findings show that the January 29 SPA did not take into cognisance, the devaluation of Alscon which KPMG put at $91 million as at December 2011. This was far below the $1.03 billion value of the plant in 2004 prior to the June 2004 financial bid. The 2012 audit is yet to be completed and deeper devaluation is envisaged.
The October SPA was 70 pages and included ALSCON’s current financial status as prepared by KPMG which stood at N14.57 billion or $91 million as at December 2011.
Apart from the above discrepancies, there are other issues that could stall the negotiations. These include impropriety as exemplified in the January 29, 2013 covering letter which referred to the company for sale as Aluminium “Shelter” Company of Nigeria in addition to a reference by BPE to a letter dated earlier than the bid date.
Interestingly, BPE, the seller, has not taken physical possession of the plant, and the Corporate Affairs Commission (CAC) has not been notified to effect the new ownership structure in line with the stipulations of Companies and Allied Matters Act (CAMA).
According to BFIG, the court ordered winner of the bid for ALSCON, there were marked differences in the SPA that was mutually agreed to by both parties in October last year and the final document sent on January 29 for execution and payment.
“We have received the supposed BPE’s SPA and found it violently in defiance to the Supreme Court order and decree of July 6, 2012 that asked the two parties to enter into a mutually agreed SPA to enable BFIG pay the agreed amount,” said Frank Scherer, Executive President, Public relations, BFIG
Negotiation commenced last year between the two parties, based on the Supreme Court ruling of July 6 last year, which declared BFI Group as the original buyer of the aluminium company and compelled the BPE to discuss with the Group. The ruling also compelled the two parties to have a mutual agreement on the sale.
Further findings show that the January 29 SPA did not take into cognisance, the devaluation of Alscon which KPMG put at $91 million as at December 2011. This was far below the $1.03 billion value of the plant in 2004 prior to the June 2004 financial bid. The 2012 audit is yet to be completed and deeper devaluation is envisaged.
The October SPA was 70 pages and included ALSCON’s current financial status as prepared by KPMG which stood at N14.57 billion or $91 million as at December 2011.
Apart from the above discrepancies, there are other issues that could stall the negotiations. These include impropriety as exemplified in the January 29, 2013 covering letter which referred to the company for sale as Aluminium “Shelter” Company of Nigeria in addition to a reference by BPE to a letter dated earlier than the bid date.
Interestingly, BPE, the seller, has not taken physical possession of the plant, and the Corporate Affairs Commission (CAC) has not been notified to effect the new ownership structure in line with the stipulations of Companies and Allied Matters Act (CAMA).
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