Otudeko’s Honeywell Group speaks on controversial First Bank loan

The Honeywell Group has said that it is servicing loan facilities obtained from First Bank of Nigeria Limited and other financial institutions across the country.

The company in a statement on Sunday said like most companies, it utilises its own equity and borrows from banks and other financial institutions to carry out its operations.

The company is reacting to the recent furore over the board composition of First Bank and credit facility obtained from the bank.

The Central Bank of Nigeria (CBN) expressed concern that First Bank “has not complied with regulatory directives to divest its interest in Honeywell Flour Mills despite several reminders.” The apex bank also expressed worry over the need to restructure credit facility to the company.

In the midst of the furore, the Chairman of the Honeywell Group, Oba Otudeko, was removed as the Chairman of FBN Holdings Plc, the parent company of First Bank Nigeria Limited.

In the same vein, Ibukun Awosika was also removed from office as chair of First Bank, alongside all the board members of the bank.

The decision, the regulator said, was made “to protect 31 million customers, minority shareholders of First Bank of Nigeria Ltd”.

The CBN also announced the immediate appointment of Tunde Hassan-Odukale as Chairman of the bank. Mr Hassan-Odukale, until his appointment, was the Managing Director of Leadway Assurance Company.

Honeywell Group in its reaction said it has a strong track record of mutually beneficial successes with its local and international financiers based on honouring obligations and delivering returns to all shareholders.

The statement said since 1972, Honeywell Group and First Bank of Nigeria have had a professional business relationship that preceded its investment in the bank over a decade later.

It said the company’s relationship with First Bank “has always been professional, at arm’s length and in accordance with all regulatory and industry practices and norms”. The credit facilities accessed from First Bank and other banks were granted after due negotiations, with the necessary documentation and in line with regulatory policies and industry standards, the statement said.

It added that the Honeywell Group has serviced all its credit facilities in line with the terms agreed with First Bank and at no point has any of these facilities been non-performing.

The company said in 2015, First Bank under the directive of the Central Bank of Nigeria (CBN), drew its attention to a 2004 circular (BSD/9/2004) which required that insider related facilities must not exceed 10 percent of paid-up share capital.

It said based on this directive, the Honeywell Group subsequently entered negotiations with the bank to agree an appropriate repayment structure and the final negotiated position was duly approved by the CBN, adding that it is important to note that the facilities have been performing from inception and to date.

The company said in accordance with agreed terms, its facilities with First Bank are adequately secured with collaterals in place at over 170% of Forced Sales Value and 230% at Open Market Value.

It said the Honeywell Group has continued to meet all its obligations on its facilities with First Bank according to agreed terms and has reduced its exposure by nearly 30% in 2.5 years.

“The facilities were charged at market rates and the lender continues to earn significant interest therefrom,” the statement said.