FBN Holdings shares recorded a notable 7.86% increase week-to-date (WTD), closing the week ending January 10, 2025, in the green, despite a complex legal dispute with General Hydrocarbons Limited (GHL). The ongoing conflict stems from a loan agreement made during Oba Otudeko’s leadership at FBN Holdings, which has sparked a series of legal battles.
A leaked letter to the Central Bank of Nigeria Governor, Yemi Cardoso, disclosed that the loan arrangement was designed to use profits from Oil Mining License (OML) 120 to reduce First Bank’s non-performing loans and avoid significant provisions in 2021. However, GHL has claimed that the bank has failed to honor its commitments, leading to a contentious legal dispute.
Adding to the tension, First Bank froze $225.8 million of GHL’s funds across various banks, a move that GHL argues violates a prior court order. Despite the escalation of the dispute, FBN Holdings’ shares continued their upward trajectory, closing at N30.20 on January 10, 2025.
The stock has seen impressive growth since the beginning of 2024. Starting the year at N23.55, FBN Holdings experienced a bullish run through the first quarter, peaking at N35.55 in March. However, uncertainty regarding the Central Bank of Nigeria’s recapitalization mandate caused a dip, dropping the share price to N23.90 by April. As the year progressed, the stock continued to experience volatility, touching a low of N20.95 in July. Nevertheless, by December 2024, the price had gradually recovered, closing at N28.05 and delivering a 19% year-to-date gain.
This positive momentum has carried into 2025, with FBN Holdings’ stock price climbing to N30.20 by January 10, backed by a strong monthly trading volume of 272 million shares.
Despite these gains, FBN Holdings is embroiled in a legal struggle with GHL, which has taken the dispute to the Federal High Court in Lagos. On December 30, 2024, the court issued a Mareva injunction freezing $225.8 million in assets belonging to GHL over the loan disagreement. GHL has accused FBN of breaching the terms of their partnership and is pursuing arbitration proceedings to resolve the matter. The legal team representing GHL contends that the injunction is unlawful and intends to challenge it in court, asserting that an earlier ruling prevents FBN from taking action against GHL’s OML operations.
The ongoing litigation has also delayed crucial oil exploration and development activities related to OML 120, further complicating the situation. Meanwhile, mediation efforts to settle the dispute have faltered, as both parties remain at odds over key proposals. Mediators have suggested restructuring GHL’s leadership, including replacing the CEO and CFO, but GHL has rejected these suggestions, viewing them as attempts to seize control of its assets.
In a bid to resolve the matter, FBN Holdings has proposed appointing an Independent Asset Manager under a new Framework Agreement, though GHL has strongly opposed this move, fearing it would lead to the bank taking over its assets.
As the legal battle drags on, the fate of both companies remains uncertain. However, despite these challenges, FBN Holdings’ shares have demonstrated resilience, continuing to rise amid the ongoing dispute. The future of the legal conflict, alongside the fluctuating stock price, will undoubtedly keep investors and industry analysts on edge in the coming weeks.