Ecobank Nigeria Plc has warned Flour Mills of Nigeria (FMN) not to proceed with its proposed acquisition of a major stake in Honeywell Flour Mills.
The advice was contained in a letter addressed to Omoboyede Olusanya, the Managing Director of Flour Mills, by Kunle Ogunba and Associates, solicitors to Ecobank.
Flour Mills had on Monday informed its investors that it had signed an agreement to acquire a 71.69 per cent stake from Honeywell Flour Mills and also a 5.06 per cent FBN Holdings equity in Honeywell Flour Mills.
However, Ecobank informed Flour Mills that Honeywell Group, the principal company of Honeywell Flour, has not been reportedly servicing its loan as expected.
The bank also stated that winding-up proceeding against Honeywell Group Limited is in progress at the Federal High Court, Lagos, with suit no: FHC/L/CP/1571/2015, following the failure of the company to pay off the said loan facilities.
The letter read: “While the said action was dismissed at the federal high court and the court of appeal, it is pertinent to state that an appeal with appeal no: SC/700/2019 has been filed challenging the said decision at the supreme court (notice of appeal is herein enclosed and marked as annexure C).
“Hence, the effect of the above is that there is currently a winding-up action/proceeding pending against the said Honeywell Group Limited.”
Ecobank quoted a provision of Section 577 of the Companies and Allied Matters Act 2020, which stipulates that any action taken by any entity in favour of a firm that is in the process of winding up is as certified in court is void.
“Consequently, we hereby demand that Flour Mills of Nigeria Plc, in its best corporate interest, immediately cease and desist from consummating the subject transaction, which aims to divest the assets of a company being wound up (Honeywell Group Limited).
“Please be further informed that the assets of both Honeywell Group Limited and Honeywell Flour Mills Plc. are the subject of the winding-up action and thus based on the doctrine of “lis-pendens” (in addition to the provisions of CAMA supplied above) you are advised to refrain from dealing with the subject asset which forms part of the subject matter of litigation,” the letter read.