LADOL Battle Samsung over Equity Holding In Fabrication Yard

ABIOLA Seun |

The dispute between the Lagos Deep Offshore Logistics (LADOL) Base and the Samsung Heavy Industry (SHI) has taken a different dimension as both companies now face legal battle over the ownership of SHI MCI Free Zone Enterprise, a joint venture set up for the execution of Egina Floating Production Supply and Offloading (FPSO) project.

The SHI MCI FZE is a joint venture between LADOL and Samsung formed to perform the Egina FPSO EPC contract between Samsung and Total Upstream Nigeria Limited.

Currently, the management of LADOL said it has issued an interlocutory application for injunction to restrain Samsung from parading itself as the owner of 70 percent of SHI MCI FZE.

LADOL says the injunction also restrain Samsung from selling or dealing with or disposing of the shares in SHI MCI FZE pending the hearing and determination of the substantive proceedings.

Speaking to newsmen in Lagos on Thursday, Fidelis Oditah, counsel to LADOL and LADOL Free Zone, accused Samsung of committing a fraud by taking LADOL’s equity in SHI MCI FZE and giving itself 70 percent ownership of the fabrication and integration facility, approved by the federal government of Nigeria.

Oditah, who said that SHI MCI FZE has no valid or subsisting sublease, added that SHI MCI FZE was not entitled to a renewal of its annual operating licence.

On the operating licence, he said, SHI MCI FZE did not satisfy the condition of regulation 41 of the LADOL Free zone regulations 2016, which stipulates among other things payment of licence fee; provision of all information, document and returns required by zone management; payment of all outstanding amounts and fees due to Zone management.

However, Prof. Oditah also stated that Global Resources Management Limited terminated the SHI MCI FZE’s sublease for three reasons which include breach of sublease covenant among others.

He said, “unremedied and material breaches of sublease covenant” as the first reason for the termination.”

He said, “Second, denial of its landlord’s title by inter alia asking the Nigerian Ports Authority, the head lessor, to carve out a portion of GRML’s leased land and grant a direct lease in favour of SHI MCI FZE, so that SHI MCI FZE could deal directly with all government regulators without needing to go through GRML or the zone management.

“The third is as a result of SHI MCI FZE’s anticipatory breach of the sublease agreement. Although its sublease provided for an upward-only rent review, SHI MCI FZE wrote to GRML and numerous government agencies informing them that on the expiry of its current sublease in June 2019, it would unilaterally reduce its rent from $70 per square metre to $5 per sq metre – a reduction of more than 90 per cent.

“GRML regarded the renunciation of the upward-only rent review as an anticipatory breach of the sublease contract which it accepted and immediately terminated the sublease as it is entitled to do as a matter of law. It did not need to wait and see whether in June 2019 SHI MCI FZE would recant and pay the reserved rent or insist on paying $5 per sq. metre. It was entitled to accept SHI MCI FZE’s anticipatory breach and accelerate the termination of the sublease.”

According to Oditah, on July 29, 2018, SHI MCI FZE’s annual operating licence expired and was terminated.

He said, “On 2 July, 2018 the LADOL Zone Management granted Samsung a two-month licence extension in order to enable Samsung to complete its work on the Egina FPSO, a strategic national project, so that it could sail away to the Egina oilfield in OML 130. The Egina FPSO sailed away on Sunday, 26 August 2018; while the two-month extension to SHI MCI FZE’s operating licence expired at midnight on 2 September 2018. From 3 September, 2018 SHI MCI FZE has had no operating licence.”