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Debts Upon Debts! Supreme Court Rules Against Honeywell Flour, As Firm struggles With N67.02bn Loans

Debts Upon Debts! Supreme Court Rules Against Honeywell Flour, As Firm struggles With N67.02bn Loans

Ten months after Flour Mills of Nigeria (FMN) acquired a majority stake in Honeywell Flour, the former is on the verge of losing some assets owned by the latter to Ecobank.



Ripples Nigeria had reported that Flour Mills acquired a 76.75 per cent stake in Honeywell through its sister companies, Ecowise Horizon Investment Limited and Creywise Investment Solution Limited in April 2022.

However, prior to the acquisition, Ecobank and Honeywell had been at loggerheads over a N5.5 billion debt owed by the food producer since 2013.



Both companies had been battling court cases, with Honeywell insisting that it paid N3.5 billion as the final payment for the debt. However, Ecobank said the sum was not the balance of the debt.

The Federal High Court and the Appeal Court had backed Honeywell’s position, but, the Supreme Court on Friday, ruled against the two lower courts, stating that Honeywell was still indebted to the creditor.

Serving the judgement of the Supreme Court, Justice Emmanuel Agim said, “I affirm the judgment of the Court of Appeal, setting aside the decision of the Federal High Court, granting the reliefs claimed for by the appellants (Honeywell).


“I hold that the appellants’ claim at the trial court fails and it is hereby dismissed,” adding that, “The appellants shall pay the cost of N1 million to the respondent (Ecobank).”


Why this matters!

The ruling against Honeywell means the company would not be able to recover its assets used as collateral to obtain the loan from Ecobank.

Honeywell’s prayer at the High Court was to compel Ecobank “to issue letters of discharge, release collaterals by which the prior indebtedness was secured.”


The undisclosed assets which now belong to Flour Mills as a result of the acquisition, will remain with Ecobank and could be cashed in for the loan balance in the event Honeywell fails to repay the loan.


Note that Ecobank had warned Flour Mills against going ahead with the acquisition and also cautioned investors in the capital market with interest in Honeywell shares.


The creditor had stated in November 2021 that it had filed a lawsuit in the Supreme Court to enable it recover the loan extended to Honeywell by winding the company up, “currently a winding-up action/proceeding pending against the said Honeywell Group Limited.”


However, Flour Mills went ahead to acquire Honeywell which was also threatened by the Central Bank of Nigeria (CBN) due to its inability to meet its debt obligation to First Bank of Nigeria (FBN).


Debt concerns for Flour Mills

A year before the acquisition, the CBN directed First Bank to sell its stake in Honeywell, which was valued at N1.35 billion. The stake was eventually sold to Flour Mills.


While the exact debt to First Bank is unknown, about N13.5 billion was stated as loan obtained by Honeywell from FBN. In order to repay the loan following CBN’s threat, Honeywell was forced to issue a corporate bond in March 2021.


Meanwhile, excluding the Ecobank loan which has been upheld by the Supreme Court, Ripples Nigeria learnt that Honeywell has a N67.02 billion loan (as of September 30, 2022) to finance at different maturity dates


This means that Flour Mills took on an N67.02 billion debt due to the acquisition of Honeywell, and coupled with the recent Supreme Court decision, the debt burden of Honeywell on Flour Mills continues to eat into its revenue. The loan is 87.6 per cent of the company’s turnover in the same period.

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