Economy
Milost Terminates $1b Deal with Unity Bank, Plans $500m Lawsuit
**Explains How Deal Started
By Modupe Gbadeyanka
American equity firm, Milost Global Inc, has terminated its deal with Unity Bank Plc after a media report in Nigeria claimed the transaction was fraudulent.
The New York-based private equity firm lamented that its effort to help grow the Nigerian economy through genuine investment were rubbished by those who were bent on tarnishing its image in the Africa’s largest economy.
However, the firm, in a statement issued on Monday afternoon, said despite this, it would continue to do business in Nigeria.
Kim Freeman, Managing Partner & CEO of Milost, stated that, “Milost will continue to do business in Nigeria despite any negative publicity and this will ultimately benefit Nigeria and Africa.”
Also, Senior Partner & CIO of Milost, Solly Asibey, stated that, “We will not be deterred by media attacks that are baseless and unfounded. Our funding objectives for the Nigerian market remains solid and unwavering.”
Explaining how its transactions with Unity Bank started, the firm said in the statement that, “On August 7, 2017 Milost Global Inc received a request for a call with the CEO and CFO of Unity Bank PLC.
“On the call, Unity Bank expressed its interest in working with Milost Global Inc as its funding partner for its growth plans in Nigeria.
“Following the call, a desk top due diligence was conducted by Milost to its satisfaction. On September 4, 2017 a $1 billion financing term sheet was fully executed by both Milost and Unity Bank.
“The facility, a combo of equity and debt, was provided on the exciting understanding that Unity Bank would delist on the Nigerian Stock Exchange and move its listing to the USA. The signed term sheet was approved by the board of Unity Bank.
“On Monday, October 23, 2017 at 11:05 EST, Milost Global Inc was visited by Mrs Oluwatomi Somefun, the CEO of Unity Bank PLC, at its New York Offices. The meeting was scheduled for 11:00am EST and it went ahead as planned. The meeting was attended by Milost Global Inc analysts and the Chairman, Mr Egerton Forster.
“At the meeting, she explained the need for capital funding at the bank and also their expansion plans. It was then agreed that Milost Global Inc would start further due diligence on Unity Bank PLC.
“Further due diligence process started on the same week on the instruction of the Chairman of Milost Global Inc, Egerton Forster. Further due diligence was satisfactory and Milost issued a binding commitment agreement to Unity Bank which was approved by the board of Unity Bank and executed by both parties on November 14, 2017.
“It is normal practice for all the publicly quoted companies which we fund to notify the market regulator on signature of the commitment letter since it has material effect to the stock; however, Unity Bank did not. Milost assumed that this did not happen because Unity had agreed to move its listing to the USA.
“To the surprise of Milost, a story broke on Bloomberg about the transaction and all the contents contained therein were true in their entirety. Bloomberg tried to reach us by email but we didn’t respond as we don’t usually entertain journalists.
“The Bloomberg article was very factual except for that Milost was to acquire 30% of the bank, whereas in reality Milost was to take a controlling 60% of the bank at closing, in a transaction that would retain the same board members and the same management for continuity of operations.
“Soon after the story broke, Milost started receiving threatening emails from a gentleman who says he is politically connected to the powers that could shut Milost out of Nigeria if Milost didn’t terminate the Unity Bank transaction.
“The said individual was very well informed about our dealings with Unity Bank such that he knew the audit group Milost had hired to carry out the final due diligence.
“He told Milost to tell the board of Unity Bank that the audit firm had instructed Milost that Unity Bank was a bad investment, failing which he would unleash the media on Milost using among other things accusations that would cause the government to send Milost packing.
“These threatening emails were shared with the CEO of Unity Bank and the then CFO Ebenezer Kawole.
“Following these emails, negative articles by Business Day Nigeria started appearing accusing Milost of operating a pump and dump operation. At that point, Milost realized that the original threats had begun to materialize, because after that first Business Day article on its alleged pump and dump, another email was received confirming that it’s the work of the blackmailer.
“Last week, Unity Bank issued a false statement which denied signing a binding commitment agreement, disputing a factual and founded Bloomberg article that initially reported on the transaction.
“Today, we woke up to yet another article that claims Milost Global Inc was involved in a case with Securities and Exchange Commission because of a failed transaction and a filed law suit against Milost Advisors which sold a company to Alex MacGregor.
“Milost Global Inc wishes to clarify this due to the repeated unprofessional conduct of Business Day Nigeria and its incompetent journalists who are failing to verify facts and communicate with all sides before print and this has led Milost to take legal action against Business Day Nigeria and their journalists Iheanyi Nwachukwu and Lolade Akinmurele. Milost Global Inc will be filing a $500 million lawsuit against the three before the end of the week.
“For the record, Milost did not violate any of the SEC regulations in the US, instead, Milost was sued by Alex MacGregor as he claimed he had paid, a Milost Global Inc former sister company, Milost Advisors LLC which was dissolved in 2016.
“Mr MacGregor filed a claim stating that he paid to acquire a shell company from Milost Advisors LLC but he did not receive the shares. Whereas the truth is that Mr MacGregor did receive the stock certificate and the transaction was filed with the SEC on May 11, 2017: see the link http://pdf.secdatabase.com/436/0001617819-17-000007.pdf and this proves that Business Day and its journalists are being used by the Unity Bank shareholder that has been threatening to tarnish Milost’s image if the Unity Bank transaction went through.
“Alex MacGregor filed his lawsuit on September 1, 2017, five months after the stock had been issued to him as the stock was issued to him on May 11, 2017.
“Milost Global Inc has analysed all its facts on the table and decided to terminate the Unity Bank transaction and the termination letter was sent to the bank this morning.
“Milost Global Inc wishes to reaffirm its interest in the Nigerian market and to also state that it will soon be releasing the first and second drawdowns to Japaul Oil & Maritime Services PLC to the total of $21 million in a combo of equity and debt.
“Another first and second draw down proceeds of $10 will be released to Resort Savings & Loans PLC; the funds will be released to both company within the month of April.
“Milost Global Inc also states on the record that it has hired one of Nigeria’s finest law firms to represent it in the lawsuit against Business day and its two journalists.
“Business Day has failed to report facts and instead focused on fake news. All the articles written by Business Day about Milost Global Inc have been negative and vindictive which shows that Milost is under attack in Nigeria.
“Milost wishes to state that it will fight tooth and nail to ensure that this kind of behaviour doesn’t affect other investors that wish to help grow the Nigerian and West African economies at large. This nonsensical behaviour by Business Day, being used by forces that seek to suck the life blood out of progress in Nigeria, ends here. Milost Global Inc will be the last investor to be treated like this in Nigeria.”
By Adedapo Adesanya
Nigeria has received the first tranche of its $5 billion derivatives financing arrangement with the First Abu Dhabi Bank (FAB), the United Arab Emirates’ largest lender.
According to a Bloomberg report published on Friday, the federal government drew about $1.5 billion over the past two weeks through a Total Return Swap (TRS) transaction with the lender.
The report stated that Nigeria will provide naira-denominated securities valued at 133.3 per cent of the loan amount as collateral for the transaction, while international financial institutions continue to express concerns about the risks associated with such derivative-based financing structures.
The financing is expected to support the government’s debt management strategy by replacing more expensive borrowings while helping finance the country’s fiscal deficit.
The first tranche is priced at 395 basis points above the Secured Overnight Financing Rate (SOFR), rising to SOFR plus 400 basis points thereafter.
The transaction further expands Nigeria’s financial relationship with First Abu Dhabi Bank, which had earlier provided about $1.2 billion to support the construction of a section of the ongoing Lagos-Calabar Coastal Highway.
The swap deal has come with much scrutiny from critics and international organisations. Recall that the International Monetary Fund (IMF), after a consultation visit, warned Nigeria against the deal, noting that such transactions are often opaque and complex.
“Our view is that the transactions in these types of structures carry risks. Usually they are opaque, so the terms are not always very transparent when we reviewed these instruments across countries,” according to the IMF’s mission chief in Nigeria, Mr Christian Ebeke.
Mr Ebeke said Nigeria could instead issue eurobonds to finance its deficits or other means to raise funding, including on concessional terms.
The Senate in April gave its approval to the agreement put forward by President Bola Tinubu, who said his administration intends to use proceeds from the total return swap to refinance expensive debt and pay for infrastructure.
By Adedapo Adesanya
The Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, yesterday clarified that the federal government is not increasing taxes but making efforts to raise the tax net.
Mr Oyedele made this remark on Thursday while receiving a delegation from the Chartered Institute of Taxation of Nigeria (CITN) at his office in Abuja.
He hailed the institute for introducing a National Tax Awareness Day and for supporting the current tax reforms of the federal government.
The minister charged the institute to double its effort in public enlightenment, stressing that many Nigerians still view taxation as a means for the government to take money from citizens.
He reiterated that the priority of the government is not to increase tax rates but to broaden the tax base by ensuring that all eligible taxpayers meet their obligations.
“We are still not getting enough revenue from taxes.
“It is not about increasing taxes but making sure that those who are supposed to pay taxes. We want to promote fairness in tax administration,” he said.
Nigeria is challenged by the inability to generate adequate revenue from taxation despite ongoing reforms, stressing that a significant number of eligible taxpayers have yet to fulfil their civic obligations.
He said the challenge facing the country was not necessarily about raising tax rates but ensuring that individuals and businesses that ought to pay taxes do so in a fair and transparent system.
The minister also commended the institute for supporting the federal government’s tax reform agenda and promoting public understanding of taxation, but urged it to intensify its advocacy efforts, noting that many Nigerians still harbour misconceptions about taxation.
According to him, many citizens continue to view taxation merely as a tool for the government to take money from the people rather than as a critical instrument for national development.
“We are still not getting enough revenue from taxes. It is not about increasing taxes, but making sure that those who are supposed to pay taxes. We want to promote fairness in tax administration,” he added.
Mr Oyedele stressed that if Nigeria succeeds in building an efficient and equitable tax system, the impact on infrastructure, public services and economic development would be transformative, challenging the institute to introduce annual awards for the country’s most tax-compliant individuals and organisations as a means of encouraging voluntary compliance and recognising responsible taxpayers.
By Modupe Gbadeyanka
Nigeria’s First Lady, Mrs Oluremi Tinubu, has given Nigerians business advice that may not involve a lot of money to start.
Speaking with newsmen recently, the wife of President Bola Tinubu said businesses like akara (fried bean cake), kulikuli (a crunchy snack from roasted peanuts or groundnuts) and roasted corn can be set up without breaking the bank.
She disclosed that to support her husband’s Renewed Hope agenda, she has provided funding packages to traders and others to the tune of N3.5 billion.
“To start akara business doesn’t take a lot of money. To start roasting corn and kuli-kuli doesn’t take much. We didn’t give them a loan; we gave it to them as a grant,” she stated.
She further said, “We’ve encouraged Nigerians as best as we could, what is within our hands, I have given, and I keep giving. Those are the things we’ve done.”
“I remember giving for TB (tuberculosis) when I heard of many TB cases; I gave N2 billion, to breast cancer, I gave N1 billion, and to [tackle] malnutrition, I gave N500 million.
“These are the things we’ve been doing to assist the government. So, we’ve had impact in agriculture, social investment, education (as scholarship and ICT training) and others. We are still open to doing more,” she disclosed.
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