By AYOOLA OLAOLUWA
More facts have emerged on how Nigeria’s biggest pharmaceutical company, HealthPlus investment deal with a United Kingdom private equity firm, Alta Semper ran into troubled waters.
The founder/Chief Executive Officer (CEO) of HealthPlus, Mrs. Bukky George, had been fighting a battle to prevent Alta Semper Capital from taking over control of her company, following a breakdown of the investment deal between both firms.
In 2020, Semper Capital had made two unsuccessful attempts to take over the bank accounts and offices of HealthPlus, leading to a public outcry. The first was on Thursday, October 24, 2020, when Alter Semper Capital agents, after visiting the firm in the day, announced the appointment of Mr. Chidi Okoro as the Chief Transformation Officer (CTO) to replace Mrs. Bukky George. The founder fought the move and got a temporary relief.
Then on November 2, 2020, the chief transformation officer appointed by Semper Capital, Chidi Okoro, led some police officers to the head office of HealthPlus in Lagos and manhandled the security men on duty who barred them from entering the premises.
The attempt to take over the firm also failed as workers loyal to Mrs. George failed to cooperate with the ‘invaders’. But, it was alleged, they promised to return with carpenters to change all the locks to the offices.
However, the embattled owner ran to the courts to challenge the legality of her sacking and takeover of the firm, insisting the board has not held a meeting in eight months.
THE ROAD TO GOLGOTHA
HealthPlus trouble started in 2018 when it signed a deal with Alta Semper Capital for the equity firm, using an investment vehicle, HealthPlus Africa Holdings Ltd, to inject fresh $18million capital to enable HealthPlus expand its network and add other services in exchange for a controlling stake to enable the equity firm recoup its investment and exit after five years.
The deal involves an initial investment of $10million by Semper Capital to purchase the shares and a further injection of $8million to run the firm. With the new arrangement, the founder, Mrs. Bukky George, now owns 48.9%, while the new investor becomes the majority shareholder with 51.1%
A source in the company confided in our correspondent that HealthPlus signed the deal with Semper Capital because it was going through financial challenges at the time and in dire need of capital to remain in operations.
Things were going well until January 2020, when signs of cracks in the relationship began to show, with both sides issuing several statements of claims and denials.
Speaking with BH on how the problem started, the embattled CEO, Bukky George, traced the beginning of the firm’s present travails to the outbreak of Covid19 and the quest by “scavengers and vultures” to reap from the pandemic.
““It is the handiwork of unscrupulous foreign and local businesswoman and businessmen intent on reaping where they have not sown simply because they now see opportunities from the COVID-19 pandemic, like scavengers and vultures.
“In a bid to forcefully take over HealthPlus, Alta Semper starved it of funds required to operate. Contrary to what the equity firm is telling the world, it has not invested a dime in the company, apart from the funds it used to acquire it shares.
“The initial payment of $10million was for a stake in the company, and the money goes to the original stakeholders. While the remaining $8million is to be injected to enable the company expand its retail footprint and enhance its competitive position”, she explained.
She however alleged that apart from falling to discharge its obligation to fund HealthPlus in line with its agreements, Alta Semper meddled with management, interfered with the functions of key employees, abused the firm’s corporate governance processes, as well as attempting to remove her as CEO.
However, in it defence, Alta Semper Capital insisted that its decision to remove Mrs. George was after a series of “significant breaches of the terms,” of her engagement as the chief executive officer of the firm and that it was made in full compliance with Nigerian laws.
“The board has explored a range of options that would enable her (George) to continue to play an alternate leadership role, but she rejected the arrangement.”
It also accused the CEO of failing to achieve the targets the board set for her, noting that the financial support of $8million it agreed to inject into HealthPlus was expected to come from ‘growth capital’ and not from its purse, an assertion debunked by George.
“Mrs. George has not only refused to agree to offers of additional investment on commercially reasonable terms, but attempted to force ASC to restructure the existing binding contracts governing their relationship agreements, which she readily signed in 2018, after taking independent legal and financial advice.
“In the interest of all stakeholders and as a result, the majority of the Board of Directors of the Company determined that a change of leadership was required, if HealthPlus was to achieve its strategic goals, and the former CEO’s appointment was terminated in accordance with its terms”, the equity firm stated.
However, BH findings revealed that ASC did not fulfill all legal requirements needed to remove George and to take over the pharmaceutical company.
For instance, available records made available to BH indicate that a board was not in place when ASC said it purportedly got the approval of the board to make drastic changes in the company’s operations and management.
While the last board meeting took place in March 2020, some of its members including the chairman, Dr. Ayo Salami, resigned their appointments, leaving behind only two members. With the resignation of the chairman and another member, the remaining two members could not form a quorum”, BH learnt.
Also, ASC’s underhand tactics was exposed in a letter it wrote to the Pharmaceutical Council of Nigeria (PCN) dated September 26, 2020 to notify the council of a change of leadership in HealthPlus. The letter was signed by Afsana Jetha, a director nominated by ASC.
However, the letterhead on which the letter was written was produced when the company turned 20 last year and is no longer in use. Also, two of the directors listed on the letterhead, Dr. Ayo Salami and Mr. Deji Akinyanju, were no longer with the company at the time the letter was written and could not have voted for or against the changes.
In a letter by the company’s solicitors, A. Muoka & Co seen by BH, the law firm said any attempt to remove Bukky George as CEO is a flagrant disregard of a court order. The firm insisted that the Board of Directors is the only body empowered to remove Mrs. George as CEO.
According to A. Mouka, the agreement required that Alta Semper and Bukky George appoint two directors each, and jointly agree on a chairman for the company.
“However, the board’s Chairman, Dr. Ayo Salami and Mr. Deji Akinyanju had resigned from the board, meaning only two directors took the decision rather than 5.
“Because the board was depleted, the decision to remove Bukky George was “Male Fide’ (in bad faith), as Mrs. George was not given an opportunity to respond to the weighty allegations made against her, some of which are criminal in nature”, the law farm stated in the later.
Also, a source in HealthPlus opposed to the takeover bid alleged that the attempted change of ownership of the pharmaceutical firm is being carried out without any legal backing.
According to him, ASC representatives had on many occasions approached the bankers to the firm to change signatories to her accounts, but were turned back by the banks which refused to cooperate with them.
The banks, he stated with glee, demanded for the board resolution authorizing the change as well as the approved minutes of the board meeting where the decision was reached.
Meanwhile, the embattled George is refusing to accept defeat by just rolling over to be taken. She had filled a suit with no. FHC/L/CS/609/2020 in a Federal High Court in Lagos challenging her removal as CEO and to stop HealthPlus Africa Holdings Limited (the investment vehicle used by Alta Semper Capital and which they control) and their nominee directors from continuing to run and manage the company in disregard of her interests as a member of the company.
“Their actions included: the deliberate delay and withholding of funds; meddling with management, interference with the functions of key employees; abuse of corporate governance processes and now the attempt to remove her as CEO.
“There is a pending motion on notice for interlocutory injunction dated May 27, 2020, to restrain the respondents from doing this but in flagrant disregard of the court process Alta Semper and its cohorts have purported to do just that,” George demanded in her reliefs before the court.
In his reaction to the boardroom battles going on inside HealthPlus, Mr. Suny Lulu, called on relevant authorities to come to the aid of Mrs. George and prevent the hijacking of the Nigerian firm by a ruthless foreign firm.
“I have always said that nobody does business anywhere the way people do in Nigeria. This is very true because underhand practices are not condoned like the business people do in the country and usually they go to the courts where the judges are hand in gloves with them.
“In a sane society, when business people take on partners there are laws to follow. Necessary papers are signed by both parties and any defaulter will be held responsible. Not so in Nigeria and that’s why numerous banks are always collapsing with no one really held responsible for the thefts.
“Doing business in Nigeria is generally hazardous because of the ineffective laws and regulating bodies like ICPC, EFCC, among many others”, Lulu lamented.
Nigerian business owners, under the umbrella of the Business Founders Coalition, recently called the attention of the Federal Government to the plight of local business founders.
Its coordinator, Dr. Richardson Ajayi of Synlab, lamented that Nigerian business founders are forced to go shopping for foreign investor partners because of un-favourable or unavailable access to local finance to grow their business.
The coalition added that venture capitalists usually demand controlling rights as a condition to invest and often seize on this wrest control from the founders.
“Our objective is not to deride it or even paint everyone with the same ‘tar’. There are many good private equity companies and many successful private equity transactions as well as patient private equity players that understand the challenges of this market. But unfortunately, there are some who come into Nigeria literally to hijack our companies.
“Our intention therefore, is to lead the charge in drawing attention to this unwholesome practice and advocate for a better investment climate for Nigerian entrepreneurs,” said Ajayi.
He stated that foreign investors tend to make sweet promises beyond funding, but do not deliver at the time of the growth, forcing local entrepreneurs to endure the breaches in a bid to ensure their dreams do not go up in smoke. This, he said, often never works and leads to boardroom tussle.
With over 90 outlets scattered all over the country, HealthPlus makes about N5billion revenue annually.