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Seven Nigerian Banks, Others Battle Aiteo Over $2bn Loan




Aiteo Owes Shell, Seven Nigerian Banks $1.7bn - Report

Seven Nigerian banks alongside Shell Plc, and Africa Finance Corporation have dragged Aiteo Eastern E&P Company to court over $2 billion borrowed to purchase an interest in Nigerian oil fields and facilities.

According to two agreements dated September 2, 2014, Aiteo borrowed the sum to purchase oil facilities in the country including Shell’s OPL 29.

The seven Nigerian banks include Ecobank Nigeria Limited, Fidelity Bank plc, First Bank of Nigeria Limited, Guaranty Trust Bank plc, Sterling Bank plc, Union Bank of Nigeria plc, and Zenith Bank plc.

According to PREMIUM TIMES, about 75 per cent of that funding came from AFC and the banks, regarded as “the onshore lenders”, via a Nigerian-law governed facility agreement known as “the Onshore Facility Agreement”.


The rest came from Shell in the form of vendor financing via an English-law governed agreement and was dubbed “the Offshore Facility Agreement”.

In October 2018, the parties began to correspond in relation to sums that the lenders said were due to them from the borrower and on August 19, 2019, the lenders alleged certain breaches of the agreements and asked the borrower to remedy them.

On September 10, 2019, the borrower denied that any sums were due in a letter addressed to the lenders, while on October 23, 2019, the lenders’ Nigerian lawyers, Aluko & Oyebode, sent a letter demanding payment of the outstanding debt within seven days.


Eight days later, Aiteo commenced proceedings against the lenders and four other parties in the Nigerian Federal High Court, asking the court to declare that it was not liable as alleged in the demand letter.

It was learned that the basis of the claim was concerning allegations of force majeure which led to requests by the borrower to restructure the facility agreements.

Aiteo argued that since the lenders refused to restructure, there was no default and subsequently obtained an injunction from the Nigerian court restraining the banks from taking legal action.


The defendants appealed against the court injunctions and sought an order dismissing the borrower’s suit.

Meanwhile, a high court in England has ruled that Shell Plc, AFC, and the seven Nigerian banks have the right to block Aiteo Eastern E&P Company Limited from taking legal action against them.

In a judgement delivered on April 1, the British court ruled that Aiteo cannot sue the claimants when a suit initiated by them against the oil firm has not been resolved.

Aiteo had urged the court to set aside the interim anti-suit injunction that had been granted ex parte.

In one of its written evidence, the claimants argued that the loans, being in “extremely large amounts”, were “systemically important loans within the Nigerian banking system” and “represent significant credits on the books of the Onshore Lenders and a default under the loans would be a very serious matter for each Lender”.

The court documents stated that no progress was made with the Notice of Appeal for a number of reasons. In early 2020 there were two adjournments, and between 24 March 2020 and 4 May 2020, court sittings were suspended on account of COVID 19. The high court and court of appeal only returned to full operation on September 28, 2020, it stated.

By October 2020, one of the claimants said that it was becoming clear to all the lenders that the negotiations were stalling and although some lenders continued to hope that they would be successful, others began to doubt that there would be a successful restructuring.

On November 23, 2020, an attempt by the CEO of Sterling Bank, one of the lenders, to break the impasse with the borrower failed.

Ige Olugbenga is a fine-grained journalist. He loves the smell of a good lead and has a penchant for finding out something nobody else knows.