Milost Global Inc., a New York private equity firm, has terminated a $1 billion equity and debt deal meant to grant it 60 per cent stake in Unity Bank Plc.
In a statement, the management of Milost said it had analysed all its facts about the deal, and decided to terminate it. It said a letter terminating the transaction was Monday morning sent to Unity Bank, even as the firm reaffirmed its interest in the Nigerian market.
Unity Bank Plc had, last week dismissed reports that Milost Global Inc. planned to invest $1 billion in the bank.
In a statement, the bank stated that it has not reached any agreement with Milost to warrant such a speculations. The statement, signed by the bank’s Head, Corporate Communications, Matthew Obiazikwor, said: “We categorically dismiss media claims of any such deal and advise the public to disregard any information to the contrary.”
“The bank hereby makes further clarifications regarding its on-going recapitalization programmes to the effect that Unity Bank has not received commitment for investment of $1 billion from Milost. Unity Bank is in talks with a number of potential investors and has not concluded to pave the way for commitment of an investment,” he said.
But Milost Global Inc gave more details of the transaction. It disclosed that on August 7, 2017 it had received a request for a call with the Chief Executive Officer (CEO) and Chief Finance Officer 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,” the firm explained.
Continuing, it said that On Monday October 23, 2017, Milost Global Inc. was visited by Mrs. Oluwatomi Somefun, the CEO of Unity Bank Plc, at its New York offices.
The meeting which went ahead as planned was attended by Milost Global Inc. analysts and the Chairman, 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. The statement stated that 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 United States of America.”
It said a report on Bloomberg on the matter was factual, except for that Milost was to acquire 30 per cent of the bank, whereas in reality Milost was to take a controlling 60 per cent 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,” it said.
“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”.
Senior Partner & CIO of Milost, Solly Asibey, stated: “We will not be deterred by media attacks that are baseless and unfounded. Our funding objectives for the Nigerian market remain solid and unwavering.”
Managing Partner & CEO of Milost, Kim Freeman, stated: “Milost will continue to do business in Nigeria despite any negative publicity and this will ultimately benefit Nigeria and Africa.”
Milost also accused a business newspaper and its journalists of being used by the Unity Bank shareholder threatening to tarnish its image if the transaction went through.
“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 million will be released to Resort Savings & Loans PLC; the funds will be released to both companies 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 the newspaper and its two journalists. It accused the newspaper of reporting fake news.