Geregu Bond Predates Current Ownership, Says Lawyer
By Patience Ikpeme
Geregu Power Plc’s N40.09 billion Series 1 Senior Unsecured Bond was issued before the company came under its current ownership, a lawyer, Fanan Akya, has said, warning against linking the historical debt directly to the present owners.
Akya, in a statement on the controversy surrounding the bond, said reports about the instrument had created a misleading impression that the current owners of Geregu Power were responsible for originating the borrowing and that the reported difficulty in servicing the bond was evidence of financial distress under the present ownership.
He said the facts surrounding the bond needed to be examined in their proper corporate and historical context, particularly because the instrument was issued on July 28, 2022, under Geregu Power’s N100 billion debt issuance programme.
According to him, the timing of the bond issuance was important because it preceded the current ownership structure. “The N40.09 billion Series 1 Senior Unsecured Bond referenced in the report did not originate under the current ownership,” Akya said.
He argued that ownership of a company should not be confused with the personal financial obligations of its shareholders, noting that a company remains a separate legal entity from the individuals or investors who own its shares.
Akya said where a company changes ownership, existing liabilities are normally considered as part of the transaction, subject to the terms of the relevant agreements, including representations, warranties, indemnities and other arrangements between the parties.
He therefore cautioned against describing the current owners as the people who borrowed the money simply because they subsequently acquired ownership of the company. “The current owners of Geregu Power should not be portrayed as though they were the originators of the N40.09 billion bond obligation,” he said.
The lawyer said the key issues in assessing the bond should include when it was issued, who controlled the company at the time, the purpose for which the funds were raised, the liabilities that existed when ownership changed and whether the incoming shareholders accepted any personal responsibility for the debt.
He said these questions were more important than simply relying on the current status of the bond on the FMDQ market.
Akya acknowledged that any reported failure to make scheduled payments on the bond was a matter that investors and regulators would need to take seriously.
However, he argued that the reported payment position should not automatically be used to establish that the current owners were responsible for the debt or that the company was in financial collapse.
He said if the eighth coupon and fourth principal repayment were not made when due, that development could properly be reported, but the report should also explain the history of the bond and the circumstances under which it was issued.
“A bond payment status is one thing. Attributing the origin of the debt to the current owners is another. The two should not be conflated,” he said.
According to him, presenting the bond as though it was created by the current owners could give investors and members of the public an incorrect understanding of the company’s financial history.
Akya also challenged the interpretation of Geregu Power’s recent financial performance, particularly the link between the company’s declining revenue and profit and the N61.47 billion major turbine maintenance programme.
He said a major overhaul of power-generation equipment should not automatically be interpreted as evidence of financial mismanagement.
Power plants, he noted, require substantial periodic maintenance because their turbines and other critical equipment must be serviced and refurbished to maintain reliability, safety, efficiency and long-term generating capacity.
He argued that such work can temporarily reduce electricity generation and, consequently, revenue.
“Major maintenance of power-generation infrastructure is not, by itself, evidence of financial mismanagement,” he said.
Akya said the decline in Geregu Power’s revenue and profit during the first half of 2026 deserved scrutiny, but added that the figures should be assessed alongside the operational circumstances surrounding the turbine overhaul.
He said there was a difference between a temporary fall in income caused by reduced generation during planned maintenance and a permanent weakening of the underlying business.
According to him, a company may deliberately incur significant expenditure and accept lower short-term output in order to restore or improve the productive capacity of its assets.
He said the more important questions for investors should be whether the maintenance programme would be completed successfully, whether generating capacity would recover and whether the company would subsequently restore its revenue and cash flows.
Akya also drew attention to Geregu Power’s credit rating, saying it provided another factor that should be considered when assessing the company’s financial position.
He noted that GCR Ratings had reportedly maintained Geregu Power’s national-scale long-term issuer rating at A(NG), with a Stable outlook.
According to him, the rating and outlook were not consistent with a simple interpretation that the company had suffered an irreversible financial collapse.
He said the reported expectation of improved generation and revenue after completion of the turbine overhaul suggested that the company had a potential recovery path once its generating assets returned to normal operations.
Akya said this did not mean the company’s current financial challenges should be ignored, but that the difficulties should be distinguished from permanent insolvency or a collapse of the underlying business.
The lawyer also questioned the way some of Geregu Power’s financial figures had been presented in reports about the company.
He acknowledged that the reported 88 per cent fall in profit after tax and 78.71 per cent decline in revenue were significant developments that investors should be aware of.
However, he said such figures should be considered alongside other financial information rather than used in isolation to establish a conclusion about the company’s overall financial health.
He cited, among other figures, a N16.12 billion reversal of financial asset impairment and a reported reduction in total liabilities to N239.33 billion. “These facts require interpretation,” he said.
Akya argued that a temporary decline in operating income during an expensive maintenance programme did not necessarily mean that Geregu Power’s business model had failed or that its current owners had recklessly accumulated debt.
He also drew a distinction between a temporary liquidity problem and insolvency, saying the two situations should not be treated as the same thing.
According to him, a company undertaking a major capital-intensive project could experience a cash-flow squeeze without its underlying assets or business becoming fundamentally impaired.
Akya also questioned the use of Geregu Power’s share price movement as evidence of the broader claims being made about the company.
He noted that the company’s share price reportedly fell from N1,141.50 at the beginning of the year to N825.70 on August 7, representing a decline of 27.67 per cent.
While acknowledging that market performance was relevant to investors, he said a decline in share price could have several causes, including market sentiment, liquidity, investor expectations and developments affecting the company or the wider market.
He argued that the price movement alone could not establish that the current owners were responsible for the historical bond obligation or that the company had no prospects of recovery. “The share-price movement does not, by itself, establish the cause of a corporate event,” he said.
Akya added that it would be difficult to draw a conclusion of permanent distress from the share-price movement while at the same time acknowledging that the company could recover following completion of the turbine overhaul.
The lawyer said the controversy was particularly important because Geregu Power operates in Nigeria’s electricity-generation industry, a sector that requires substantial investment in infrastructure and equipment.
He warned that inaccurate or incomplete reporting about a major generating company could have consequences for investors, lenders, bondholders, business partners and other participants in the power sector.
He called for greater attention to the distinction between liabilities incurred by a company before a change in ownership and obligations personally undertaken by its new shareholders.
“If a bond was issued before the current ownership arrangement, that fact should be prominently stated,” he said.
He added that where liabilities were inherited as part of a corporate transaction, the relevant agreements should be examined before responsibility was assigned to the incoming shareholders.
Akya maintained that scrutiny of listed companies was legitimate and necessary, particularly where investors’ funds and capital-market obligations were involved.
However, he said such scrutiny should be based on the complete financial and corporate record.
“Financial journalism should not become a vehicle for creating panic among investors or attributing historical corporate decisions to people who were not responsible for making them,” he said.
He urged stakeholders to continue monitoring Geregu Power’s bond obligations, financial results and maintenance programme, but said those issues should not be used to alter the history of the company’s ownership or the origin of its debt.
The lawyer said the bond situation should ultimately be assessed alongside the company’s audited financial statements, regulatory disclosures, transaction documents and progress on the turbine maintenance programme.
He maintained that the existence of a corporate liability before a change in ownership did not automatically make the incoming shareholders the personal borrowers.
“The bond predates the present ownership arrangement,” Akya said, adding that Geregu Power’s current operational difficulties should also be considered against the background of the turbine overhaul and the expected return of generating capacity.
He said investors and the public were entitled to examine the company’s financial performance critically, but cautioned against conclusions that failed to distinguish between historical corporate obligations, current operational challenges and the personal responsibilities of shareholders.
Akya said Geregu Power’s position should therefore be judged on the basis of verifiable corporate, financial and regulatory information, rather than a narrative that, in his view, wrongly attributes a pre-existing debt to the company’s current owners.
