In what may seem a truce after years of seemingly intractable battle, the crisis that engulfed Eko Corp Plc, owners of the Eko Hospital brand, dating back to 2001, may at last be nearing its end.

Pointer to this emerged on Friday, when directors of the crisis-ridden healthcare facility management company wrote to the Nigerian Stock Exchange (NSE), announcing plans for an extra-ordinary general meeting.

Shareholders, at the meeting, according to the notice of the meeting slated for July 5, 2018, are required to approve the conversion Eko Corp’s long standing debts to its directors into equity stake. They are also to finally give effect to a Special Placement scheme approved 10 years ago at a Completion Board Meeting held on June 17, 2008, to allot 110m ordinary shares of N4.00 each to Geoff Ohen Ltd, its majority shareholder.

The EGM slated for July 5, 2018 at the Lagos Chamber of Commerce & Industry Conference and exhibition centre, behind MKO Abiola Gardens, Alausa, Ikeja, Lagos, according to a statement by H.I. Iheukwumere (Mrs.), Eko Corp’s company secretary, is in line with an order by the Federal High Court in a judgment delivered by Olatoregun J. in Suit No. FHC/L/CP/25/12 on May 7, 2018.

Specifically, as part of the special resolution also, 75% of the debt owed to Dr. Sunday Kuku, Dr. Augustine Amechi Obiora, Dr. Alexandra Eneli (the three founding directors/owners), as well as Chief F.G.A Cole, would be converted to equity at N1 per share.

Specifically, this means that while N43.824m would be converted to equity in the name of Dr. Kuku if approved at the EGM; N42.688m would be so converted for Dr. Obiora; N27.735m in favour of Dr. Eneli (deceased), now represented on the board by Senator Michael Ajegbo; and N43.32m, for Chief Cole.

Ending An Epic Battle

The resolution is expected to end a fierce battle between the founding directors on one side, and Dr. Geoffery Ohen, a shareholder, once accused of secretly acquiring the company’s shares.

Premium Times had in 2014 quoted court papers, where Dr. Kuku recounted how Dr. Ohen, through the backdoor and unknown to other directors, became majority shareholder of the company, owing up to 53% stake.

Trouble is believed to have started when Eko Corp was unable to pay its creditors, including the founders’ entitlements and emoluments of office, following which they were owed various sums of money between June 2001 and December 2007.

While Kuku was then owed N43m, for example; the company was indebted to Obiora to the tune of N42m; and Eneli, N27m, such that when Eneli passed on, the company was unable to pay the emoluments and other entitlements. His family was persuaded, along with “the other founders to consider the option of converting greater part of the debt owed them to equity through debt-equity swap,” Kuku explained further.

Determined to ensure that their dream, once prided as one of the nation’s healthcare facilities, bounce back, the directors sought funds to meet the company’s financial challenges and approached Geoff Ohen Ltd, a company owned by Dr. Geoffery Ohen, and offered him 110m ordinary shares of 50 kobo each at N4 per share, by way of a special placing.

The offer “was purportedly executed by a Share Purchase Agreement between Ekocorp Plc and Geoff Ohen Ltd in August 2007 and Dr. Ohen and one Olusegun Olusanya became nominees of Geoff Ohen Ltd and they started to sit at the board of Ekocorp Plc,” Mr. Kuku continued.

“Sequel to the weak financial standing of Ekocorp Plc, the Board of Directors, with a view of reducing the huge financial liabilities of the company, decided and approved at several meetings held in 2007 and 2008 that the indebtedness to its founding directors and one of its directors (F.G.A Cole) amounting to N118 million be liquidated by a debt-equity conversion at percentages of 75% of the debt to be converted to equity whilst the remaining 25% to be paid to the directors in cash.”

At the time of the special placement, Ohen reportedly told the directors, according to Kuku, that he held only 63m shares (or 19%) in the company.

Kuku further stated that both Ohen and Olusanya attended the board meeting where the debt-equity swap was discussed and they gave their approval “after exhaustive discussions.”

“The said 25% of the debt was paid out of the proceeds of the special placing paid by Dr. Ohen. He (Dr. Ohen) approved and actually signed that 25 per cent of the debt be paid to the directors in accordance with the several decisions of the board of directors meeting in which they (Ohen and Olusanya) actively participated,” Kuku said.

After the approval of the debt-equity swap and share purchase agreement, the board scheduled an Annual General Meeting of Ekocorp Plc in October 31, 2007 where the shareholders would pass a resolution to give effect to both decisions.

He added that a broader resolution which increased the authorized share capital of Ekocorp Plc and gave the Board powers to allot the new increased shares as they deemed fit were passed at the annual general meeting.

“The essence of the increase in the authorized share capital of Ekocorp Plc from 250m to 500m was to give the directors the liberty to apply the increment in the authorized share capital to effect the debt-equity swap and allot 110m shares to Geoff Ohen Ltd in accordance with the decision already reached and re-affirmed in several board of directors’ meetings,” he added.

However, after the post-offer completion of the special placing, the registrars to the offer informed Ekocorp Plc that the Securities and Exchange Commission needed a more specific resolution as the one they submitted was “too broad.”

Ohen’s company then procured a specific resolution without reverting to Ekocorp Plc’s General Meeting for approval, according to Dr. Kuku, and no resolution for the special placing was tabled or passed.

Deception

After he was allotted the 110 million shares by special placing, and in addition to other shares he had acquired from Guaranty Trust Bank Plc, GTB, and Security Swaps; Ohen’s shareholding in Ekocorp Plc jumped to 53%, shocking the founding directors.

Kuku accused Ohen of deception for failing to inform other directors that he already “illegally” acquired other shares of Ekocorp Plc from GTB and Security Swaps Ltd, who acted as financial adviser and issuing house for the subscription of Ekocorp Plc shares in 1997.

“Dr. Ohen and Geoff Ohen Ltd purportedly acquired the said shares during the pendency of suit FHC/L/CS/1482/98 Capital Consortium and Ekocorp Plc wherein the latter is challenging the propriety or otherwise of GTB and Security Swaps registering the said shares in their names and Dr. Ohen and Geoff Ohen Ltd were aware of the pendency of the suit.

“Dr. Ohen and Geoff Ohen Ltd also in bad faith urged Ekocorp Plc to discontinue with the suit without disclosing its actual intentions and interest in the shares,” he continued.

With his new status as the majority shareholder, Dr. Ohen moved to block the debt-equity swap of the founding directors, according to Kuku.

“They have used their claims of having the majority shareholdings to block the swap on the grounds that the October 31, 2007, Annual General Meeting of Ekocorp Plc resolution authorizing the debt-equity swap was too general and an omnibus resolution and did not specifically refer to the debt-equity swap.

“Dr. Ohen has been writing petitions to regulatory authorities in his purported authority as a majority shareholder,” Mr. Kuku said.

“Dr. Ohen and Geoff Ohen Ltd in objecting to the execution of the debt-equity swap have deliberately concealed, misrepresented or ignored the fact that it was the same resolution, for which there was no specific AGM approval, that formed the basis of the allotment of 110 million shares to Dr. Ohen and he has benefited under the same resolution,” he added.

Impasse

Following the impasse Ekocorp Plc was deadlocked and could not convene its Annual General Meeting for years, resulting in severe sanctions from statutory agencies.

Ohen had however reacted by insisting that Ekocorp Plc was not indebted to its founding directors, adding that the prospectus upon which they based their invitation to invest never disclosed such liability. He also stated that he had not been perturbed about the 75 per cent debt-equity swap because any decision of the board of directors would still require ratification by the company in a general meeting for it to become effective.

For him, “the huge financial liabilities referred to was a direct result of the mismanagement of the two surviving directors (Messrs Kuku and Obiora) who were directly and solely responsible for running and management of Ekocorp Plc.

“It was in order to satisfy a preconceived but hidden agenda that the two surviving founding directors concocted a strategy to further emasculate the company financially under the guise of an alleged debt-equity swap,” he added.

Ohen said he was unaware of any obligation to disclose his acquisition of the company’s shares from other source, since it “was already in the possession of the Registrar and company secretary whose duty it is to report to the Board of Directors.”

With his new status as the majority shareholder, Mr. Ohen said that he became privy to the records of Ekocorp Plc, including a letter addressed to the Securities and Exchange Commission, SEC, seeking their permission to their proposed debt-equity swap.

The regulatory agency declined to grant the permission, insisting that there must be a shareholders meeting to that effect, according to Mr. Ohen.

He denied any board resolution to create more shares for the purpose of allotting the 110 million shares to him, insisting that the deal had been concluded and he had paid the N440m three months before the October 2007 Annual General Meeting.

He also denied stalling the company’s Annual General Meeting; instead, accusing the founding directors of “frustrating” efforts to hold the meeting so as to prevent discussion of their plan to disguise secret profits as debts owed them.

Not True

“After it (Geoff Ohen Ltd) acquired its controlling shares and had access to the records of the company, it discovered that the alleged debt was not genuine but was secret profits made by the founding directors,” Mr. Ohen said.

“There was never any lawful debt owed by Ekocorp Plc to the founding directors and in no circumstances will the majority shareholder approve the looting of the company resources under the guise of a debt-equity swap.

“It was in realization of this fact that it continually requested the holding of an annual general meeting which proposal was continually blocked by the founding directors who realized that the first agenda at the annual general meeting would be their removal as directors for misfeasance and not the regularization of a bogus debt-equity swap,” he added.

Ohen further denied using fierce-looking and armed police officers to disrupt meeting, stating that it was the founding directors who are fierce-looking and whose threatening mien and determination to seize their secret profits by force that were disrupting the meetings.

The N440 million was meant to improve the operations of Eko hospital, said Mr. Ohen, adding that were it not for the money the hospital would have gone out of business.

“There is no debt owed to the founding directors nor is there any debt-equity swap approved by the annual general meeting of the company and the interest of the directors is only to gather secret profits,” Mr. Ohen said.

This interest, he stressed, “is an activity unfairly prejudicial to the interest of Geoff Ohen Ltd as majority shareholder and Ekocorp Plc who is the victim of bad faith of its two directors,” he added.