CEC Africa Investments Limited has accused Xerxes Global Investment Limited of breaching its agreement that led to the acquisition of Abuja Electricity Distribution Company. Both companies agreed to pay $41 million for their ownership of the DisCo but Xerxes Global Investment has defaulted on its part, asking CEC Africa Investment to consider its goodwill as a contribution.
According to a report, Xerxes Global failed to fulfil its monetary commitment to the acquisition which occurred in 2013. When the deal was signed, the company was said to have pledged half of its equity share in KANN Utility Company Limited to CEC Africa Investments as security.
Both Xerxes Global Investment and CEC Africa Investment are part of KANN Utility Company Limited, a consortium company that acquired Abuja Electricity Distribution Company. They are the major shareholders of the DisCo with 60% shares while the government owns 40%.
Does goodwill buy company? Punch reported that the Chairman, Xerxes Global, Ambassador Shehu Malami, said his goodwill should be considered as the company’s contribution. According to him, his goodwill was not valued by CEC Africa Investment.
Malami said his goodwill guaranteed the sale of Abuja Electricity Distribution Company to KANN Utility Company. He added that greed was behind the crisis rocking KANN. However, the Managing Director, CEC Africa Investment, Emmanuel Katepa, said goodwill doesn’t buy a company.
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Katepa said the goodwill didn’t lead to the acquisition of the Abuja DisCo as claimed by Malami. He said Xerxes Global investment had left his company to bear the burden of the $41 million acquisition fee alone without showing any desire to meet its own financial obligation which is to be paid to the Bureau of Public Enterprises (BPE).
“Till date, Xerxes has not shown any capacity to repay its part of that obligation to CEC Africa, six years after the privatisation.
“Yet it wants to claim major ownership of the AEDC but has failed to fulfil any financial obligation and has left the business risk on CEC Africa.”
Katepa added, “Ambassador Shehu Malami failed to address the central issue which remains that he and his organisation are claiming shares for which they have failed to pay and show no capacity to pay.
“In recognition of its failure to pay its share of the acquisition cost in 2013, Xerxes even pledged to CEC Africa, as security, half of its equity share in KANN.”