Controversy hits sale of Delta Steel Company

Controversy hits sale of Delta Steel Company

A major crisis has broken out over the purported sale of Delta Steel Plc, Aladja.

Premium Steel and Mines, a company owned by frontline businessman Sunil Vaswani, says it has bought the troubled steel giant, promising to inject N70 billion in the first phase and N300 billion in the subsequent phases.

But a lawyer, Chief Ajibola Aribisala (SAN), who was appointed the receiver/manager of the company by the Asset Management Corporation of Nigeria (AMCON), yesterday urged President Muhammadu Buhari to cancel the deal which, he said, was at a great loss to the country.

Aribisala said AMCON sold the company for N28billion as against the N33billion offered by a Chinese company, China Polaris Technologies Company Ltd, which was ready to pay the total sum at once.

Vaswani, said the lawyer, offered to pay 10 per cent of the sale before 30 days after offer’s acceptance and spread the balance over  eight years, with a moratorium of one year. He added that it was his refusal to accept the Vaswani offer that led AMCON to announce the termination of his company’s appointment as receiver/manager.

A legal battle case is ongoing over AMCON’s termination of the SAN’s contract, The Nation learnt.

Vaswani initially offered to buy the company with West African Mines and Steel Limited before eventually buying it with Premium Steel and Mines Limited. The receiver/manager at the time Premium Steel bought the company was Dr. Joseph Nwobike, SAN.

Premium Steel and Mines Ltd was incorporated on December 15, last year. West African Mines & Steel Ltd was incorporated on May 3, 2013.

Aribisala added: “It is also interesting to note that the said Premium Steel & Mines Ltd was only incorporated, for the above purpose, on December 14, 2014, when the bidding was already in full progress, thus, the company did not submit any bid on the sale of the assets, yet it was the same company that the assets of Delta Steel Company Plc were purportedly sold to .

 “The essence of AMCON’s acquisition of bad debts from commercial banks, along with the collateral securities, is to confer on AMCON the assurance that in the event of failure of the borrower, in the case Delta Steel Company Plc, to discharge the indebtedness, AMCON can fall back on the pledged securities to recover the indebtedness by virtue of section 34 of the Asset Management Corporation Act.

“By virtue of Section 35 AMCON Act, the Corporation is vested with the same right to creditors (i.e. the banks from which the loans were acquired) over the pledged securities and can release any security that eligible financial institution could have realised and can exercise any power conferred by any document that forms part of the eligible bank assets.

“By virtue of Section 4(b) and (c) of the AMCON Act, the Corporation is statutorily mandated to:

“(b) efficiently manage and dispose of eligible bank assets acquired by the corporation in accordance with the provisions of this Act; and

“(c) Obtain the best achievable financial returns on eligible bank assets of other assets required by it in pursuance of the provision of this Act having regard to –

 the nee to protect or otherwise enhance the long-term economic value of the assets,

The cost of acquiring and dealing with those assets

The corporation’s cost of capital and other costs

Any other factor which the Corporation considers relevant to the achievement of its objects.”

“Also, by Section 43(3) of the AMCON Act, all officers of AMCON, including the managing Director – Mr. Mustafa Chike-Obi, are obligated to act in good faith, in the execution of the duties, power and obligations imposed on AMCON or any of its directors.

“Furthermore, by Section 15(5) of the Constitution of the Federal Republic of Nigeria 1999, AMCON being an agency of the Federal Government of Nigeria , is obligated to avoid corrupt practices and abuse of power.”

AMCON’s sale of the company to Premium Steel and Mines, which is to be made instalmentally when there is a buyer willing to pay N33billion at once, Aribisala said, did not only deviate from the provisions of Section 15(5) of the Constitution, but also violated Section 4(9b) and (c) of the AMCON Act.

He said the sale “amounts to an economic sabotage or economic crime since the proceeds of sale, which is quite below the sum of N33billion which China Polaris Technologies Company Ltd, the highest bidder would have paid, belongs to the Federal Government of Nigeria by virtue of AMCON being a Federal Government agency.”

“The sum of N33billion , which was the best offer received on the disposal of the assets of the company, would have been more than enough to discharge the debts owed to AMCON and several unsecured creditors, being owed to staff and ex-staff of Delta Steel Company Plc as pensions and gratuities,” Aribisala claimed.

The Presidency, The Nation learnt, is already looking into the petition on the sale.

Premium Steel and Mines pledged to expand the company’s capacity and establish industries for other value added products.

It said the product range at the complex is aimed at optimal utilisation of the country’s mining and gas resources and producing import substitution products.

Premium Steel also said it would provide employment.

The investor pledged to assist the communities in their education and healthcare.

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