MTN DRAGGED TO COURT FOR BREACH OF CONTRACT

0
1303

A lawyer, Dr. Charles Dumber Mekwunye has filed a case against MTN Nigeria communication Limited (MTNN), accusing the telecommunication giant of breach of contract.

In the N200m suit, Dr. Mekwunye joined as co-defendants investment company, Lotus Capital Limited, an asset management Company Stanbic IBTC Asset Management and two other limited liability companies, IHS Holding Limited and INT Towers Limited.‬

Dr. Mekwunye, ‪ in his witness statement on oath he swore to and filed before a Federal high court in Lagos South West Nigeria by his Law firm, averred that sometime in 2008, he was invited by a fund management company, Lotus Capital Limited and Stanbic IBTC Assets Management Limited, to invest in a fund purportedly established by the Lotus Capital called ‘Telecoms Private Equity Fund, which was an investment into MTNN Linked Units, and thereby bought 5,000 of the MTNN Linked Units at the rate of 24.56 USD, per unit in 2008, and paid the sum of 122,800 USD, which was equivalent of N18,376,800 million, thereafter he entered into an agreement with the company who was an agent/nominee of Stanbic IBTC Asset Management Company and MTN Nigeria communications.

The investor also stated that Lotus Capital through a letter dated July 3, 2008, informed him that he had been allocated with 4,990 units, which represented 4,990 Linked Units of the MTN Communications Nigeria Limited’s private placement instead of 5000 MTN Linked Units. He added that pursuant to the said Telecoms Private Equity Fund Investment Agreement-Joint, he paid the sum of 122,800 USD, which was equivalent of N18,376,800 million, as consideration for the 5,000 units of the MTN Nigeria Linked Units.‬

He averred further that both Lotus Capital Limited and Stanbic IBTC Asset Management Company, represented to him that at the end of three (3) years, the MTN Nigeria’s Linked Unit will be exchanged for MTN’s Shares in a Special Purpose Vehicle, which will be listed in the Nigeria Stock Exchange or globally recognized stock exchange, this he said was the primarily considered before investing in the MTN’s Linked Units.‬

However at the end of the three-year period, stanbic IBTC asset management in breach of the agreement failed to create the Exit Special Purpose Vehicle, (SPV), as agreed in private placement memorandum on the ground that MTN International is already quoted on the Johannesburg Stock Exchange, and it was unwilling to setup another publicly quoted company, as well as on certain “tax consideration”.whereas they clearly misinterpreted to him the creation of an Exit SPV when they never intended to setup same, especially vast the tax legislation, MTN International being already quoted on the Johannesburg Stock Exchange, and other circumstances as regards public companies have remained unchanged from the commencement of the offer and for the three years of the contract tenure up to February 2011, and should have been anticipated by MTN International and the defendants.‬

Following the failure/refusal of the defendants to setup a Special Purpose Vehicle, SPV, at the expiration of the three years anniversary of the nominee structure, as stated in the memorandum,Lotus capital without his consent or knowledge entered into a supplemental agreement to the Custodian Term and Condition with Stanbic IBTC Assets Management limited dated November 1, 2010, which was captioned Information Memorandum in respect of Exit Mechanism for beneficial shareholders of MTN Nigeria Communication Limited, amending the terms of the private placement memorandum regarding the establishment of a Special Purpose Vehicle, thereby creating alternative Exit Mechanism which was neither listed on the Nigeria Stock Exchange or any globally recognized stock exchange.

Dr. Mekwunye averred further that in breach of the 2008 agreement, he was not given the 90 days or three months notice required under Clause 12 of Custodian terms and conditions to the private placement memorandum for the exchange of the exit mechanism and by April 4, 2013, Lotus Capital informed him of an upward review of “management fees” without his knowledge/consent, the said management fees was arbitrarily reviewed to one percent of the value of his investment, and was to take retroactive effect from January 2013, as a result, the sum of 1,750 USD, being one percent of the then value of his investment was deducted by the Lotus. Capital as per the letter of April 4, 2013 in January 2013, January 2014 and January 2015 making the total of 5,250 USD management fees deducted from total value of his MTN unit each year. This he claimed has caused him considerable loss since 2011.

As a result of the alleged breach of contract, the plaintiff is seeking the following court declaration that the Lotus Capital is in breach of the contract for the sale of MTN Linked Unit shares it entered into with him on May 21, 2008, a declaration that there exists a fiduciary relationship between them.

Declaration that the defendants improperly induced him to enter into telecom private equity fund management of May 21, 2008, by representing to him after three years of the nominee structure all MTN Nigeria Linked Units will be converted into shares in MTN Nigeria through a Special Purpose Vehicle.‬

He is also seek a court order for the immediate return of the sum of 1,770 USD, being one percent value of his investment deducted by Lotus Capital the on January 1, 2013, and for the refund of 1,770 USD deducted in January 2014, and also the sum of 4,500 USD, deducted in January 2015, purported as management or nominee fees or such as court may find to have been deducted as management fees for each of the three years.‬

An order of perpetual injunction restraining the defendants jointly, and severally, their privies, agents, and successors from further deducting any sum as management or nominee or any other fees whatsoever from the dividends accruing to him from the dividends payable on MTN Nigeria Linked Units or from the value of the 5000 MTN Linked Units owned by him.
And an order compelling the defendants to pay him the sum of N200 million, as general damages against the defendants.‬

However, Stanbic IBTC Assets Management Limited, in its statement of defence deposed to by its Investment Manager, Mr. Olugbenga Saseun,averred that Dr Mekwunye and other defendants are unknown to it and that it has never had any relationship whatsoever, whether contractual or otherwise, with the investor.‬

However he affirmed that the plaintiff in his statement of claim was right that sometime in 2007, MTN International under private placement arrangement offered MTN Linked Units of MTN Nigeria Limited to some private individual and institutional investors in accordance with the terns and conditions stated in a private placement memorandum, adding that he was involved and had knowledge of the offer by virtue of his employment with the StanbicIBTC Asset Management company but stated that his employer did not either directly or through Lotus Capital, solicit the interest or investment of the plaintiff in the offer of MTN Linked Units offered under the private placement arrangement.‬

He also affirmed that his employer never make any misrepresentation to the plaintiff, and that his employer was not privy to the alleged “telecoms private equity investment agreement” entered into by the plaintiff and Lotus capital therefore, it is not possible that his employer could have been a party to any misrepresentation allegedly made to the plaintiff that after three years the MTN Nigeria communications would set up a special purpose vehicle to be listed on the Nigeria Stock Exchange.‬

Consequently, StanbicIBTC asset Management urged the court to dismiss the suit as is baseless, lacks merit and unjustifiable.‬

Sign up for our daily newsletter

Get the latest news delivered straight to your inbox every day. Stay informed with the Orijo Reporter's leading coverage of Nigerian and world news.

LEAVE A REPLY

Please enter your comment!
Please enter your name here