Sometime in early 2012, a wealthy, sophisticated, and beautiful middle-aged Nigerian businesswoman walked into a Lagos courtroom to testify before a judge. She had just filed a lawsuit before the court in a desperate bid to salvage her late husband’s investments in the Tourist Company of Nigeria Plc (TCN). She was also understandably trying to secure her financial future and that of her children. Her husband had just died, and she suddenly found herself thrust in the position of the sole breadwinner of the family.
The woman is Mrs Maiden Ibru, the widow of renowned businessman and politician, Alex Ibru. During her testimony on that fateful day, she made some pretty shocking revelations, albeit with some dramatics. She told everyone gathered in the courtroom that just as she was walking in, she supposedly saw the apparition of her late husband telling her to fight. So, fight she did, by spilling all the secrets about the company.
Apparently, all was not well with Tourist Company of Nigeria Plc, a hospitality company which owns one of Nigeria’s oldest luxury hotels – the Federal Palace Hotel. Perhaps no one would have known about TCN’s woes if Mrs Ibru hadn’t instituted her lawsuit and subsequently given her bombshell testimony. However, the sad thing is the fact that though it’s been seven years since Maiden Ibru’s court appearance, all is not still well with the company.
Catch up on the intrigues of the family feud, the allegations of financial mismanagement, the legal battles, as well as how all these have impacted on the company’s performance.
A history dating back to independence
Before Nigeria’s independence from Britain on October 1st, 1960, there were many foreign-owned companies in the country. Of the many, AG Leventis Group, was one of the biggest in the country at that time. The group had several subsidiaries operating in different sectors of the Nigerian economy and wider West African region. One of these subsidiaries, Victoria Beach Hotel Limited, established and operated The Palace Hotel.
The hotel, with its 150 rooms, marked Nigeria’s introduction to luxury hoteling. Indeed, the investors that established it aimed to set the bar high for the Nigerian hospitality industry, and to a large extent, it can be said that this mission was accomplished. The Palace Hotel was a source of national pride and even served as the venue for Nigeria’s Independence Day celebration.
Government takeover of the hotel
In what can only be described as Nigeria’s earliest attempt to nationalise foreign-owned companies, the Tourist Company of Nigeria Limited was incorporated on April 10th, 1964 for the purpose of acquiring the Palace Hotel. At the time, TCN was wholly owned by the Federal Government of Nigeria. The acquisition process was successful, and the hotel was renamed The Federal Palace Hotel. Between 1964 and the 1970s, the Government operated and even expanded the company; with the construction of the Towers Hotel and Casino which has some 224 rooms.
How the Ibrus came into the picture
By 1992, exactly 28 years after Nigeria acquired the Federal Palace Hotel, Alex Ibru and his brothers (Goodie and Michael Ibru) sought to take ownership of TCN. The brothers successfully used their company, Ikeja Hotels Plc, to acquire TCN from the Federal Government, and by April 20th, 1994, the company was listed on the Nigerian Stock Exchange.
It should be noted that the Ibru family is one of Nigeria’s foremost business elite who tactically positioned themselves as the custodians of Nigeria’s economy following independence from Britain. The family has business interests in different sectors of the economy, including media. Maiden Ibru currently oversees one of Nigeria’s biggest dailies, The Guardian, which was established by her late husband in 1983.
TCN in need of help
As the years passed by, the glorious days of The Federal Palace Hotel also gradually passed away. The Nigerian hospitality industry was becoming more competitive, thanks to the emergence of other big players such as Eko Hotels and Suites. These new entrants were offering more luxury for more exclusive tastes; consequently, TCN struggled to compete.
To compete effectively, the company needed to upgrade its facilities and services. And to help actualise this, South Africa’s Sun International Limited came on board and took up a major stake in the company in 2010. The South African luxury hotel group also supposedly invested heavily towards the refurbishment and restructuring of TCN’s properties.
Accusation of fraud and a well-publicised lawsuit
Between 2003 and 2009, the Tourist Company of Nigeria was struggling to keep afloat financially. Going by Maiden Ibru’s lawsuit, not only was the company broke, it was insolvent and incapable of carrying on as a going concern. The woman even alleged that the company was heavily indebted to the tune of N2 billion. She specifically accused TCN of owing Oma Investments Limited, a holding company through which her late husband owned indirect shares in the hospitality business. The words uttered by her during the highly-publicised litigation captured the extent of the financial troubles TCN was immersed in.
“Omamo Investments, between 2003 and 2009, lent to the Tourist Company $7.1m, N610m, N381m and N19m, which the company has been unable to repay.
“The respondent has failed beyond resuscitation, has insufficient assets to meet its liabilities, does not have the capacity to meet the conditions for which it was incorporated, and has suffered a total erosion of its capital base. The respondent is both cash-flow and balance-sheet insolvent, and has not been carrying on effectively, the business of hoteling and catering.”
She went further to accuse her late husband’s brothers of betraying her husband. According to Mrs Ibru, her late husband was particularly disappointed in Goodie Ibru who, at this point, was the Chairman of the Tourist Company of Nigeria. This is because Goodie and his fellow accomplices allegedly, “altered some of the company’s documents, diverted money and committed all sort of atrocities without the knowledge of my husband. I am a widow and I have children to take care of.”
Investors’ confidence in jeopardy
In August 2016, news reports filtered in about Sun International Limited’s decision to leave Nigeria. As the company acknowledged, the contentious and protracted dispute between the company’s major shareholders (which consisted mostly of the Ibru’s), “frustrated all attempts to develop and improve” the company.
Earlier in January that year, Nigeria’s Economic and Financial Crimes Commission (EFCC), had opened investigations into Sun International Limited’s investment in TCN. This situation supposedly affected the company’s fortunes, as it reported a 20% fall in diluted adjusted headline earnings per share (AHEPS) to 628 cents for the year to June.
Eventually, Sun International Limited closed shop and left the country, though checks by Nairametrics confirmed that it still owns a major stakeholding in TCN as at H1 2O19; maintaining its initial 49.3% shareholding.
A business at risk
To a large extent, Maiden Ibru emerged victorious in the fight for the Tourist Company of Nigeria Plc. Although the company was never liquidated as she had prayed the court, Goodie Ibru stepped down as the company’s Chairman. She also facilitated the placement of Goodie Ibru’s ouster as the Chairman of Ikeja Hotels Plc, even as Oma Investments Limited acquired majority stake in Ikeja Hotel. This development affords the woman a considerable control over TCN, seeing as Ikeja Hotels is equally a stakeholder in TCN.
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However, TCN is struggling
According to the company’s unaudited H1 2019 financial results, it recorded a loss after tax of N931.3 million, after earning a total revenue of N1.6 billion. Earlier in full-year 2018, the company ran at a loss after tax of N1.3 billion, after previously recording a loss of N3.2 billion in 2017. The company is also currently facing possible delisting from the Nigerian Stock Exchange due to corporate governance lapses bordering on free float deficiency.