Our First Bank Loans Performing, Honeywell Assures
The Honeywell Group has explained that all the credit facilities it obtained from First Bank Nigeria Limited have been performing since they were obtained.
The company also stated that its relationship with First Bank has always been professional, at arm’s length and in accordance with all regulatory and industry practices and norms.
The Honeywell Group, in a statement on Sunday, was reacting to last week’s letter from the Central Bank of Nigeria (CBN) to the former Chairman of First Bank, Mrs. Ibukun Awosika, wherein the banking sector regulator had expressed concern that the “bank has not complied with regulatory directives to divest its interest in Honeywell Flour Mills despite several reminders,” as well as to restructure its credit facility to the company.
The Chairman of the Honeywell Group is Mr. Oba Otudeko, who was last week removed as the Chairman of FBN Holdings Plc, the parent company of First Bank Nigeria Limited.
But Honeywell, in the statement, said: “Like most companies, Honeywell Group utilises its own equity and borrows from banks and other financial institutions to carry out its operations.
“Partnering with local and international financiers, we have a strong track record of mutually beneficial successes with our partners, based on honouring obligations and delivering returns to all stakeholders,” the company said.
It added that since 1972, the Honeywell Group and First Bank of Nigeria have had a professional business relationship which preceded the group’s investment in First Bank over a decade later.
“Honeywell Group’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 which we have accessed from First Bank and indeed other banks were granted after due negotiations, with the necessary documentation and in line with regulatory policies and industry standards.
“We have serviced all our credit facilities in line with the terms agreed with First Bank and at no point have any of these facilities been non-performing,” it said.
It stated that in 2015, First Bank, under the directive of the CBN, drew its attention to a 2004 circular (BSD/9/2004) which requires that insider-related facilities must not exceed 10 per cent of paid-up share capital.
Based on this directive, it stated that it subsequently entered negotiations with the bank to agree on an appropriate repayment structure and the final negotiated position was duly approved by the CBN.
“In accordance with agreed terms, our facilities are adequately secured with First Bank, with collaterals in place at over 170 per cent of forced sales value and 230 per cent at open market value.
“In addition to the above, First Bank, on the directive of CBN, requested additional security in the form of FBN Holdings Plc shares held by the Chairman of Honeywell Group, Dr. Oba Otudeko, citing 2001 circular. This was duly provided through an authorisation to place a lien on the shares,” it added.
According to the company, the Honeywell Group has continued to meet all its obligations on its facilities with the bank according to agreed terms and has reduced its exposure by nearly 30% in two-and-a-half years.
“The facilities were charged at market rates and the bank continues to earn significant interest therefrom,” it said.