Why we took MRS Holding to arbitration panel in Paris – Ivorian oil company

Societe Nationale Petroliere de Cote D’Ivoire (PETROCI), Ivorian state oil company, has explained why it took MRS Holding to arbitration panel in Paris, France.

PETROCI, equivalent to Nigerian National Petroleum Corporation (NNPC), while complaining recently about how the Nigerian oil company has refused to abide by the decision of the arbitration panel to pay the money awarded against it, said it took MRS to the court over a business deal that went awry.

The oil company went into the genesis of their business relationship and how MRS bypassed it to run the company they both founded for business convienence.

According to the company, they (PETROCI and MRS) had come together and formed a company in joint investments but along the line PETROCI was excluded in the operations and management of the said company.

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According to the narration, sometime in April 2008, both MRS and PETROCI received a notice of expression of interest for the purchase of Chevron’s downstream distribution assets in West and Central Africa. While PETROCI is a company registered under the Ivory Coast laws and is known for handling upstream gas and oil activities, MRS on the other hand is a Pan-African conglomerate of companies diversified in activities such as oil trading, shipping, storage, distribution and retailing of petroleum products.

Following receipt of the notice of expression, both companies in a bid to increase their chances of success in the acquisition of the controlling shares of Chevron Texaco downstream distribution assets in West Africa created a Special Purpose Vehicle (SPV) called Corlay Global SA (“Corlay”). The SPV was incorporated in Panama and capitalized for US $25,000,000 of 25 million shares of $1 each with both parties owning 50 percent equity in the company (i.e. each company owning 12.5 million Shares in Corlay) which was evidenced through the issuance of share certificates.

Both entities, acting through Corlay, made a successful bid in the sum of US$675.8 million for the acquisition of Chevron Texaco downstream distribution assets in West and Central Africa. Following the successful bid, they agreed to make equal equity contributions of $337.9 million US Dollars to make up the US$675.8 million acquisition sum.

PETROCI made an initial contribution of $60million US Dollars while MRS stated that it made an initial contribution of $75.8 Million US Dollars, leaving a shortfall of about 540 million US Dollars.

As a result of the shortfall and PETROCI‘s inability to obtain finance from its local banks in Ivory Coast (Cote D’Ivoire) due to the civil unrest in the country at that time, it was agreed that MRS would obtain a bridge facility on behalf of both parties from the consortium of banks In Nigeria.

It was further agreed that the bridge facility would be in the name of MRS for the purchase of the CHEVRON/TEXACO assets, but the parties would jointly share responsibility to repay the loan on a 50:50 ration.

Pursuant to the foregoing also, PETROCI executed the guarantee security provided for the loan. In other words, although the loan was taken in the name of MRS, PETROCI was the sole guarantor. Hence the acquisition sum was released by the local banks in Nigeria directly to CHEVRON/TEXACO on behalf of PETROCI and MRS, paving way for both entities through Corlay to acquire and take over five subsidiaries of Chevron Inc. in West and Central Africa (Chevron Cote d’lvoire, Chevron Togo, Chevron Benin, Chevron Cameroon, and Chevron Nigeria).

Subsequently, PETROCI stated that to its surprise, Chevron Nigeria was unilaterally renamed as MRS Oil Nig. Plc by MRS without the consent of PETROCI although some of the other subsidiaries like Chevron Cote D’Ivoire still retained the correct name of the holding company as Corlay Cote D’Ivoire.

In September 2008, as part of the acquisition process, a Share Purchase Agreement was entered into between Corlay Global SA, Chevron Africa Holdings Ltd, MRS and PETROCI in recognition of PETROCI and MRS as joint stakeholders/shareholders in Corlay Global, adding that PETROCI is a joint beneficial shareholder of the 100 percent interest of Chevron Africa Holding Ltd, that is 60 percent controlling shares in MRS Oil.

Unfortunately, about the time of the above successful acquisition, turbulent times existed in Cote D’Ivoire such that between 2008 and 2010, Ivory Coast was plagued by civil war. This naturally affected the management and administration of PETROCI, being a public enterprise and investment vehicle for the Ivorian Government.

As a result of the foregoing, there was also no proper handover of management of PETROCI and necessary Information when Cote D’Ivoire began to return to some level of normalcy. It was only when AMCON sued PETROCI based on PETROCI’s sole guarantee of the share purchase loan that PETROCI commenced investigation to trace back the status of its investment in Corlay which has assets in Nigeria by way of Corlay’s investment in MRS Oil.

PETROCI then began to investigate MRS independently regarding its stewardship over the existing SPV Corlay Global S.A in Panama and the various subsidiaries in West and Central Africa.

PETROCI at that same time also directly started making a series of enquiries at MRS Oil and MRS Holding and requesting for necessary information and accounts of its management of their joint investment in subsidiaries of Corlay in west and central Africa.

PETROCI also reviewed publicly available financial statement of MRS Oil, following MRS Oil and MRS Holding’s deliberate refusal to cooperate.

In the process of investigating, PETROCI stated that it discovered deliberate concealment and misrepresentation of corporate and other essential information incompatible with standards of financial reporting hence MRS failed to disclose corporate information required to be filed by public companies under the Investments and Securities Act, 2007 and extant Rules and Regulations.

Furthermore, PETROCI stated that its interest was deliberately concealed and even converted on the face of the financials of MRS Oil as listed company in Nigeria.

Also, the board composition and management team did
not reflect the constituent shareholders of Corlay as PETROCI is 50% shareholder of Corlay and did not have any representation on the board of MRS Oil.

PETROCI accentuated that in the same vein, the financial statements of MRS Oil carefully concealed the true ownership of the company by Corlay (the investment vehicle by which PETROCI and MRS control directly 60 percent of the shares of MRS Oil).

Also, the board of directors of MRS Oil as procured by MRS Holding falsely misstated that the Interest of Corlay in MRS Oil was now held by MRS Africa Holding Limited.

PETROCI stated that it did not agree or consent to any such transfer of Corlay’s interest in MRS Oil to MRS Afrlca Holding Limited.

By extension, no shareholders meeting of Corlay has been summoned or held to approve any such sale or transfer and no notice of any such meeting was served or received by PETROCI.

Moreso, PETROCI stated that the financial statements also showed that dividends had been declared over the years by the board and AGM of MRS Oil and paid to shareholders, but Corlay has received no dividend though declared from 2010 to 2014.

MRS Oil in response claimed that Petroci failed to share equally all the acquisition costs in relation to the purchase of Chevron assets pursuant to an agreement.

Based on the above, it is evident that a dispute had arisen from claim of breach of the Consortium Agreement entered into by PETROCI and MRS OIl which was for floating a Special Purpose Investment Vehicle (SPV) to be known as Corlay Global.

Interestingly, Clause 17 of the Consortium Agreement provides that “in the event
of a dispute between or amongst the parties on their rights and duties under the terms of the agreement, or of any element introduced in pursuit of the activities of the Consortium, the dispute shall be referred to and determined by the Court of Arbitration of Paris.”

Hence, PETROCI took the matter to the arbitration panel, which eventually entered judgment against MRS in March 2021.

Efforts to get reactions from MRS through its official telephone number and email did not yield any result as of the time of filing this report. The call went unanswered and correspondence to its email address was not replied.