Following the passing of Florence Seriki, founder of Omatek Ventures Plc, in March 2017, Yemi Ogundipe resumed office as the new Group Managing Director.
Ogundipe’s first kettle of fish was the foreclosure of the company’s factory along Kudirat Abiola Way, Oregun, Ikeja by a court order.
I visited the Oregun property recently and there is still a sign that reads ‘FHC/L/CS/590/17 possession taken today 18/7/17 by court order’ on the wall.
As of last year, the rumour surrounding the takeover was that the company was unable to repay loan facilities it owed some banks. And not much has been heard about the company since then.
But as it would turn out, the court case that led to the closure was as a result of a loan the company took from one entity — the Bank of Industry (BOI) Limited — about 6 years ago.
This is according to the certified copy of the Federal High Court case that Techpoint obtained.
Apparently, Omatek applied for a loan on December 10, 2012. Exactly 10 days later, BOI offered a loan facility of ₦3,909,310,000 (Three Billion, Nine Hundred and Nine Million, Three Hundred and Ten Thousand Naira) to the original equipment manufacturer (OEM).
The purpose of the loan was to enable the local OEM to procure assembly components to produce 20,000 units of laptops for the Nigeria Police Force (NPF). Also, part of the loan was meant to refinance other loans.
Contrary to Omatek’s claim, it appears the company didn’t use the fund for the said purpose. Unless the NPF backed down on its order, supplying the laptops should have guaranteed the servicing of the loan. We reached out to the force for clarification but didn’t get a response.
In September 2014, which was about two years after getting the loan, Omatek went ahead to restructure the loan facility in a bid to achieve some advantage. The restructuring involved altering the terms of the loan agreement.
Not long after the restructuring, the company’s account with BOI began to witness low activities.
And beyond maintaining low activities in its bank account, Omatek wasn’t meeting its responsibility of paying outstanding instalments as well as pending interests on the loan which was in contrast to the conditions of the restructuring.
This can be considered as an indication that the expected returns on the loan weren’t coming in for Omatek.
Down the line in February 2015, Omatek used its property in Oregun as a security for the loan facility through a Loan and Mortgage Agreement.
After the mortgage agreement, the company requested for another restructuring which was granted in October 2015, after much deliberations between the concerned parties.
The second restructuring, which would allow Omatek to consolidate the already existing term loan and working capital loan into a single loan facility, was more of an indication that the company was in financial distress.
Also, the restructuring was to enable the company to repay a sizeable amount of the loan to the bank.
By March 2, 2017 however, despite attempts to restructure the loan on two separate occasions, a statement that originated from the BOI revealed that the loan facility had risen to ₦5,953,044,966.54 (Five Billion, Nine Hundred and Fifty-Three Million, Forty-Four Thousand, Nine Hundred and Sixty-Six Naira, Fifty-Four Kobo).
According to the BOI, Omatek didn’t dispute the figures in the statement.
Worthy of note is that it is within this period that the passing on of Omatek founder was announced. Was the bank statement the proverbial last straw that broke the camel’s back?
Obviously, the death of Seriki made BOI take the legal route by instigating a lawsuit that eventually led to the taking over of the company’s facility.
The lawsuit was on the ground that the OEM will continue to hold on to the money it borrowed which will definitely end up as a financial loss to the bank. Not forgetting that the property was used for the mortgage agreement.
The Bank of Industry claimed that the company wasn’t ready to liquidate its indebtedness. And the bank had no other feasible means of getting back the funds except the mortgaged property.
However, Omatek challenged the court case about two months after the foreclosure.
Among Omatek’s arguments was the fact that the appointment of Emmanuel Adeyeye Oyebanji by BOI — as the manager of the mortgaged property — was done with an invalid deed of appointment.
Furthermore, Omatek claimed that the tenure of the loan had yet to elapse and that BOI couldn’t prove that the company was incapable of paying back the entire loan.
So on May 18, 2018, Hon Justice Hadiza R. Shari at the Federal High Court, Lagos struck out the case.
This means that Omatek has the right to get back its property which could translate to the company having a future to look forward to.
However, the future of the company is still dependent on BOI not instigating another lawsuit in an attempt to recoup its loan.
[UPDATE, October 10, 2018]: The trouble is not yet over for Omatek Ventures
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Nigerian startups raised $17.6m in Q1 2019, 8.5% higher than they did in Q1 2018. Find out more in the latest quarterly edition of the Nigerian Startup Funding Report here.