The desire by Tourist Company of Nigeria Plc(TCN), to sell off one of its properties, the Federal Palace Hotel might not be coming any time soon as the company suspended its Extraordinary General Meeting (EGM) which was scheduled to hold on Friday, March 17, 2023, due to an order of interim injunction from the Federal High Court.
According to nairametrics.com, the injunction was served on the company in a lawsuit filed by Omamo Investments Corporation.
Omamo Investments Corporation, the plaintiff, claims to be a creditor with a secured charge over the company’s property, specifically the Federal Palace Hotel and Casino located at No. 6-8 Ahmadu Bello Way, Victoria Island, Lagos.
What Omano Investments wants
The plaintiff sought an injunction restraining the defendants from selling the property, as well as interim court orders to freeze TCN’s bank accounts, restrict the movement of funds from those accounts, and prohibit all defendants from discussing the sale of the property.
The lawsuit is based on the claim that Tourist Company of Nigeria (TCN) received various loan facilities from the plaintiff totaling USD 21,614,000 but failed to repay the loan, and intended to sell the property in question.
As a result, the plaintiff is seeking an order restraining the company from having an EGM pertaining to the approval of an asset sale.
TCN response: TCN has acknowledged the suspension of the EGM in a press release and is in the process of filing a response and counterclaim to the originating summons.
As a result, the notice of any subsequent EGM would be circulated to the shareholders of the company subject to the outcome of the court hearing and determination of the motion for an injunction.
Implications for AGM
The suspension of the EGM could have significant implications for the company and its shareholders.
The EGM was intended to discuss the approval of an asset sale, but with the injunction in place, it remains to be seen how the company will proceed with its plans.
The outcome of the lawsuit filed by Omamo Investments Corporation will determine the future of TCN’s plans to sell its assets and could impact the company’s financial performance going forward. Investors will be keeping a close eye on the situation and waiting for further developments.
Backstory
The company had in February given notice of an EGM that included on its agenda, a special resolution to give directors the authorization to raise capital for the company.
• “That the directors be and are hereby authorized to consider, negotiate, agree and implement all such options for the restructuring of the statement of financial position of the Company, including by way of an asset sale, share sale or such other capital injection that would maximize the interest of all stakeholders inclusive of shareholders, creditor, employees, government, community and others.”
The company has external loans of about N31.2 billion including loans owed to Omamo Investments. The company included in its 2022 fillings that it had not recognized any expenses arising from the related party loan based on a “Company Voluntary Arrangement” signed between Sun International, Ikeja Hotels, and Omamo Investment Corporation.
Sun International owns 49,3% of the company while Oma Investments owns 18.1%. Associated Ventures owns 18.7% and Ikeja Hotels 12.2%. TCN had asked to be delisted in 2017 but approval has been withheld by the NSE pending when the company resolves its governance issues.
Optics
It is worth noting that TCN has been facing financial challenges in recent years. In its 2021 financial report, the company reported a loss after tax of NGN 2.3 billion, a significant increase from the loss of NGN 7.8 billion reported in 2020.
• In its 2022 results released a few weeks ago, it reported a loss of N3.2 billion taking its total accumulated losses to N27.5 billion. The company has reported losses since 2018.
• However, the company revalued the hotel’s asset adding N21.8 billion to its revaluation reserves bringing it to a total of N41.8 billion.
The company share price has remained flat at N2.84 year to date.
