As two different factions lay claims to the board of Ikeja Hotels Plc, the fear is that the ensued controversy may worsen the company’s image and finances on the long run if not speedily resolved, writes Festus Akanbi. Contrary to expectations, the boardroom crisis that engulfed the board of Ikeja Hotels Plc and which blew upon with a controversial Extraordinary General Meeting in Lagos, a fortnight ago, has refused to simmer. In an unprecedented manner, what started as a family squabble has snowballed into the company’s board leading to the removal of the chairman of the company, Mr. Goodie Ibru, by some shareholders.
Other resolutions passed at the EGM included: the appointment of Mr Olumide Braithwaite and Mr. Tunde Sarumi as directors of the company; the appointment of the audit firm KPMG Nigeria Limited, for the purpose of carrying out a forensic audit of the company from 1999 to 2014; and a forensic audit of the share register and verification of the funding and payment for the shares of the company by shareholders, directly or indirectly, and of shares that amount to two per cent or more of the company’s issued share capital. Although Ibru was absent at the meeting, two directors – Mr. Rasheed Olaoluwa, who represented the interest of BoI which holds 13.1 per cent in the company and Fadeke Alamatu who is the alternate to Oba Otudeko – were present.
However, having dragged the battle to the court of law, investment analysts said this is one boardroom crisis that promises to linger for a long while. The embattled chairman of the hotel, Ibru, had stuck to his gun, insisting that he remained the chairman of the board of directors of the firm as he declared the extraordinary general meeting (EGM), which was held outside the premises of a subsidiary of Ikeja Hotels, Sheraton Hotel, Ikeja, Lagos, null and void. Ibru, who said he would challenge his purported removal in court, stated: “In the first place, the so-called EGM was not properly convened. We have over 14,000 shareholders, none of whom was issued with the notice required by Sections 220-222 of CAMA (Companies and Allied Matters Act), nor were they afforded the opportunity to appoint proxies to vote in their stead.” And as the two sides engaged in media war, Justice Muhammed Yunusa of the Federal High Court in Lagos last week upheld the EGM convened by three shareholders – Alurum Investments Limited, Dadifoll Limited and RFC Limited – where the Ibru was removed. The judge’s order was sequel to an application filed by the three shareholders against Ikeja Hotels, IHL Services Limited and Union Registrar Limited to validate the resolution of the shareholders. But according to media reports last week, after listening to the counsel by the plaintiffs, Mr. Michael Orimobi, Justice Yunusa ordered that the resolution taken at the meeting dated January 6 was valid, pending when the determination of the motion of notice is granted. He equally ordered the defendants in the suit – Ikeja Hotels Plc, IHL Services Limited and Union Registrar Limited, their representatives and all parties – duly entitled to attend the aforesaid meeting to be guided by the order and comply with it.
President, Nigeria Shareholders Solidarity Association (NSSA), Mr. Timothy Adesiyan, who spoke on behalf of the minority shareholders of the company, said it was time for the chairman of the company to go considering the failure of Ikeja Hotels Plc to pay dividend to shareholders in the past six years. Speaking with THISDAY last week, Adesiyan said investors in the company deserved explanations on how Ikeja Hotels is being run. He said, “The Company’s joint investors deserved to be accounted to honestly. There should be proper disclosure to us and for the past six years, we have not been given any dividend and we have complained at different fora including at annual general meetings to the chairman who has arrogated to himself the functions of the chairman and executive managing director which is against the principle of good corporate governance. The position of the chairman and the managing director in other companies that are well managed are definite, even the Companies and Allied Matters Act says so. At least, 95 percent of quoted companies in Nigeria operate along that line and don’t forget that absolute power corrupts absolutely and that is the bone of contention in Ikeja Hotels.”
Giving reasons for the inability of the company to pay dividend, Ibru had explained that the only problem the company has is that of under-capitalisation, explaining that efforts to bring in fresh capital of about $35 million in the form of equity and debt were frustrated. “Yes, we do have a challenge which is under-capitalisation. The company is grossly under-capitalised. We are talking about N2 billion. But that is peanuts for a company that has an interest in Federal Palace Hotel and controlling interest in Abuja Sheraton Hotels. “We are not paying dividends because we are not making profits but because our profits have been used as responsible organisation to meet our debt obligations. But that does not mean the company is losing money. The company is still making a profit. “There is no year that we have declared a loss. But a time came when we said we must shore up the capital base of the company. And that was when we approached Salt Capital, a private equity company based in the United States.
“The company would have brought in $10 million in cash and $35 million as a loan, which would have helped to shore up our capital base and assist to a very large extent, our refurbishment programme that is on-going. “But the sad thing is that after we carried everybody along on the need to bring in capital by way of private placement and rights issue, at the eleventh hour it was scuttled. The hotel is being refurbished and the money is coming from internally generated money,” Ibru explained. He assured stakeholders that the on-going dispute would not affect the day-to-day operations of the company. “We separated the management of the company from the ownership. We contracted the management to a very reputable international hotel management group, Sheraton. “Irrespective of any contest between the owners, the hotels are still running. That is the beauty of it. So any contest among the owners does not affect the business,” he said.
Interest Payment to Banks
However, faulting the explanation for the no dividend policy of the company in the past six years, Adesiyan said, “You can imagine, when the removed chairman was speaking on a television programme, he wondered how some aggrieved shareholders could expect him to pay dividend when he is still paying interests on banks loans. For God’s sake, do companies which are paying interests on loans don’t pay dividend? “There are companies that operate purely on loans and they still pay dividend. The excuse that he is not paying dividend because he is still paying interest on loans is not a mature excuse. That is from the shareholders’ point of view.” When asked if the shareholders are aware of the likely negative effects of the crisis on the hotel, he said, why not? “When it didn’t affect the hotel’s operations, we didn’t benefit anything. When it was operating normally, the former chairman was not giving us any return on our investment, so what other thing do we lose. He is the one to feel the impact of this. He has been telling us to be patient, saying it is a long term investment but we are telling him our patience has been exhausted.” Although the shareholders said they decided to remove Ibru because the company had been performing poorly and had not paid dividends in the last few years, Ibru faulted these claims, saying the company was doing well and there was no issue of poor management.
Ikeja Hotels is Financially Healthy
“There has been no problem with the company. We are very proud of the company. This hotel was the first international privately owned hotel in Nigeria. “And we had support from high profile international institutions like the International Finance Corporation (IFC) and Nigerian Industrial Development Bank (NIDB), which is now Bank of Industry (BoI). They were proud of this hotel as their flagship investment. The structure of the company remains strong,” he said. In addition to the court order, the Publisher of The Guardian newspaper, Mrs. Maiden Alex-Ibru, has also faulted claims by Goodie Ibru that the EGM where he was removed as chairman was null and void, saying the meeting was properly convened and the resolutions remained valid. Mrs. Alex-Ibru, in an advertorial, said the requirement of personal service of notice of meeting which Goodie Ibru alluded to has never been complied with by the secretary of the company, even when the secretary had the addresses of shareholders.
“It is thus desperate and preposterous for Mr. Goodie Ibru to say now that without serving personally every shareholder, the EGM is invalidated, when under his direction and supervision the company secretary had become hostile to the shareholders and other board members, refused to make the addresses available to the requisitionists, and was fiercely determined to frustrate the meeting to the extent of defying a subsisting court’s order that he should attend the EGM,” she said. She added that the company secretary of Ikeja Hotels was duly served on behalf of the company, the special notice of the resolution to remove Goodie Ibru as a director of the company. According to her, the obligation was that of the company secretary to notify Goodie Ibru. “If Goodie Ibru had frustrated the company secretary from complying with the law, he cannot turn around and say that he did not receive the notice, and seek to invalidate the resolution removing him under that guise,” Mrs Alex-Ibru said.
On the issue of regulators not being present at the EGM, she said they contacted the regulators – the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) – who said they did not attend the EGM because they were served the Abuja order of injunction, ostensibly by Goodie Ibru. “They were thus not aware that there was a subsisting court order validating the meeting. What manner of dishonesty and mischief make a person conceal such information? Can that same person then be allowed to say that meeting is invalidated for the absence of the regulatory authorities when he had skewed the facts to the regulatory authorities so as not to make informed decisions whether or not to attend the EGM? “In any case, no law exists to invalidate a properly convened meeting of the shareholders of a company simply because a regulator, who really attends essentially only as an observer, is absent,” she said.