The High Court in Kampala earlier this month extended further giving the final ruling of case in which Maestrol Oil and Gas Solutions – MOGAS Uganda Limited is battling receivership with Stanbic bank Uganda Limited under Kabiito Karamagi.
In October 2021, Stanbic Bank Uganda sought control of petroleum products distributor after the latter reportedly failed to pay back a three-year loan of an unidentified amount.
The bank had appointed Kabiito Karamagi as receiver of MOGAS.
However, the petroleum company filled miscellaneous application in which court suspended Kabiito Karamagi as a receiver of MOGAS for a period of 6 months.
The court ordered a temporary injunction issues restraining the respondents, their agents, assignees, servants, workmen, or all others acting under their instructions from selling, disposing of, wasting, damaging, alienating, or otherwise interfering or dealing howsoever with the company’s property for a period of 6 (six) months from the date of ruling.
Lady Justice Jeanne Rwakakooko also ordered a temporary injunction issues restraining MOGAS, their agents, assignees, servants, workmen, or all others acting under their instructions from selling, disposing of, wasting, damaging, alienating, or otherwise interfering or dealing howsoever with their property until determination of the main suit.
“Following a 3 (three) month period from the date of this Ruling, the parties shall return to Court and the state of affairs with regard to this matter shall be reviewed and if satisfied with the progress of the Applicant in completing investment negotiations and the comprehensive audit, Court shall, if satisfied and for a justifiable reason, enlarge this period for a further 3 (three) month period.”
The Justice added that, “if it is established that the Applicant’s pursuits with potential investors have been rendered fruitless, then the 1 st Respondent [Stanbic] shall be at liberty to reinstate the Receiver and the receivership shall continue, pending the outcome of the Main Suit (if the said Main Suit is not heard and determined within this period) and if the Applicant is able to secure financing within this period, then those funds shall be alienated and held pending the determination of the main suit or settlement of the main suit, whichever comes first.”
Upon return to court, Dennis Wamala and John F. Kanyemibwa, Counsel of MOGAS, regarding the Capital Raising process, said that the company was in negotiation with 4 entities;
1)Ethos Mezzanine Partners of South Africa who had indicated their willingness to finance them to the tune of 10 million dollars and that they had signed the letter of intent on 22nd of April, 2022.
2) Equity Bank Uganda Limited- That on 14th of February, 2022, MOGAS applied for credit facilities to the tune of 10 million dollars and they are in advanced stages of signing the offer letter.
Ugandan enterprises urged to explore regional oil and gas opportunities3) Ola Energy who expressed their willingness to come on board as equity partners and are finalizing their due diligence process.
4) Petredec of the United Kingdom who have expressed their willingness to come on board as equity partners and are carrying out their due diligence.
Although Stanbic’s lawyers, David Kaggwa and Ogwang Same had sought trashing of MOGAS’s submission, Court extended it for further three month period, saying that “the parties shall return to Court and the state of affairs with regard to this matter shall be reviewed and if satisfied with the progress of the Applicant in completing investment negotiations and the comprehensive audit: Court shall, if satisfied and for a justifiable reason, enlarge this period for a further 3 (three) month period.”
While appearing before court for the third time on the 27th of April, 2022 for the review of the state of affairs, counsel for the Stanbic bank asked that the suspension of the recovery proceedings be lifted and the Receivership reinstated on grounds that there was no justifiable reason for the extension of the period for a further three months since the Applicant’s pursuit with any investor had not bore fruit within the first three months.
However, Lady Justice Rwakakooko was satisfied with MOGAS’s progress saying that “from the submissions and evidence presented before and now as far as investment negotiations go, the Applicant had earlier submitted that they were in negotiations with Ola Energy Limited and now submitted and gave documents to show that they were in negotiations with Ethos Mezzanine Partners, had applied for credit facilities from Equity and had communications with Petredec.”
“Regarding the issue of the Comprehensive Audit, again, from the submissions and evidence presented show that the firm of Ssekitto, Kaimanda and Company Associates, Certified Public Accountants of Uganda have been engaged to carry out the comprehensive audit, and from their letter, state that they anticipate that that they will share the draft audit report for initial discussion by the 31st of May, 2022. So, wouldn’t this be considered progress from the previous position?” she asked.
Giving her ruling via email on 5th of May, 2022, Lady Justice Rwakakooko said there are a number of practical considerations that have to be made in deciding this matter.
“I re-echo that payment of the “ascertained” debt should be in everyone’s best interests and that reasonable efforts ought to be employed to pursue this whilst potential investment in the Applicant’s business is explored and an independent audit conducted to determine the real controversies (the amounts claimed) between the parties, for their conclusive determination at trial.”
“Following the return of the parties to this Court and the review of the state of affairs with regard to this matter, I am satisfied that there is progress in this matter, and therefore, in accordance with the Ruling of this Court and Order dated 21 st January, 2022 and 7th February, 2022 respectively, I hereby enlarge this period for a further three (3) month period, in line with the timelines in paragraph (a) and (c) of the said Ruling and Order, for the finalization of the same. I so Order.”
