Shareholders of Filmhouse Holding Limited, a key player in the movie cinema and film distribution sector, have initiated legal proceedings to contest a proposed sale of 37,765,000 ordinary shares, representing a 58.1% stake in the company, to Trivos Film and Media Limited for N4,917,843,707.
The lawsuit, filed by aggrieved shareholder Cerrerera Investment Services Limited, claims that the majority shareholder, Cape Media Limited, has unilaterally decided to proceed with the sale to Trivos, a Nigerian media firm, according to Nairametrics.
Cerrerera’s petition argues that the sale price reflects a diminished valuation of Filmhouse, potentially harming the interests of minority shareholders and undermining the company’s overall value. The case raises significant questions about corporate governance and the rights of minority investors within the firm.
Cerrerera Investment Services Limited filed a petition (FHC/ABJ/PET/18/2024) in the Federal High Court in Abuja, aiming to prevent the sale of a 58.1% stake in Filmhouse Holding Limited.
The legal action targets multiple parties, including Filmhouse, Cape Media Limited (Mauritius), Trivos Film and Media Limited, six directors, and the Corporate Affairs Commission.
Represented by their lawyer, O. Adenaike Esq., Cerrerera seeks a court order to restrain Cape Media from proceeding with the sale of its 37,765,000 ordinary shares.
Filmhouse has a total of 65,000,000 ordinary shares as its minimum issued share capital, making the contested stake a significant portion of the company.
The case highlights ongoing concerns over corporate governance and shareholder rights in the media sector.
Of these, 37,765,000 ordinary shares, constituting 58.1%, belong to Cape, while Trivos holds 17% of Filmhouse’s shareholding, amounting to 11,050,000 ordinary shares.
The petitioner’s Chief Operating Officer, Rajiv Mekkat, stated in his affidavit that his company, which owns 1,699,425 ordinary shares (2.1% of the minimum issued share capital of Filmhouse), stands to be prejudiced by this development.
Mekkat further indicated that Cape Media recently expressed its intention to sell its 58.1% shareholding in Filmhouse through a private equity sale to a willing buyer.
He revealed that two corporate entities—Logical Pictures and Canury West Africa Limited (CWAL)—submitted letters of intent to acquire Cape’s shares.
Logical Pictures proposed a payment of 58% of $15 million, asserting this was the fair valuation of Filmhouse in 2023, along with an additional $3 million management package. Meanwhile, CWAL initially offered N6 billion, later increasing its bid to N8.5 billion.
Despite these substantial offers, the petition claims that Cape Media did not consider them, raising further questions about the decision-making process behind the proposed sale. The ongoing legal challenge seeks to protect the interests of minority shareholders in this high-stakes situation.
Mekkat explained that while Cape failed to positively consider the offers made by earlier interested buyers, it was recently discovered that Cape had a “clandestine agreement” to sell its 58.1% stake to Trivos for a consideration that he believes represents a significant destruction of Filmhouse’s value, consequently unfairly prejudicing the interests of the petitioner as a member of the media industry.
“The second respondent (Cape), by a yet-to-be-executed Share Sale and Purchase Agreement, has agreed to sell its 58.1% shareholding in Filmhouse to Trivos for a significantly reduced consideration of N4,917,843,707, compared to the N8,500,000,000 offer from CWAL and the N6,000,000,000 offer from Logical Pictures.
“The agreed consideration for the sale of the second respondent’s 58.1% shareholding to the third respondent was based on a significant reduction of the existing valuation of the first respondent,” Mekkat stated.
He claims these directors, aware of the impending share sale, neglected their fiduciary duties by failing to act in the best interests of Filmhouse.
The petitioner argues that allowing the sale to proceed would unfairly prejudice their long-term investments and those of other minority shareholders.
He contend that the directors’ inaction could jeopardize the company’s viability and undermine shareholder value, intensifying scrutiny on the governance practices within Filmhouse.
“The petitioner has reason to believe that it and other minority shareholders of Filmhouse might be compelled to accept unfavorable terms as Trivos seeks to take control of Filmhouse.
“The petitioner is further concerned that if it is forced to comply with the provisions of the Shareholder Agreement, which is binding on it, it would have to sell its shares and long-term investment in Filmhouse at an unacceptably low valuation,” he stated in his motion dated June 14, 2024.
In their affidavit, Hosea Udoh, a litigation executive, responded that Filmhouse, being a company, does not own shares in itself; rather, its shares are owned and held by different shareholders, each with full proprietary rights over their respective shares.
He underscored that no other shareholder has the authority to interfere with or appropriate these shares unless the petitioner chooses to sell them voluntarily.
Udoh emphasized that the ability to sell shares in Filmhouse lies solely with individual shareholders, affirming that these shares are considered personal property.
He acknowledged that Cape recently indicated its intention to sell its shareholding in Filmhouse; however, he stated that this intention never materialized, as Cape has not sold its shares and, to the best of the respondents’ knowledge, is no longer in the process of selling its shareholding in Filmhouse.
“Contrary to paragraph 19 of the petitioner’s affidavit, the respondents are not aware of any clandestine agreement by the second respondent to sell its shares to the third defendant.
“For clarity, it is completely false that Trivos has agreed to purchase the shares of Cape,” he asserted.
Udoh challenged the petitioner’s assertions regarding the proposed sale of shares, stating that the alleged Share Sale and Purchase Agreement between Cape Media and Trivos Film and Media Limited is merely a draft and lacks binding contractual status.
“Upon careful reading of the unexecuted Share Sale and Purchase Agreement between Cape and Trivos, the amount of N4,917,843,707 proposed as the purchase price for Cape’s shares, assuming it is true, does not expressly or impliedly represent a valuation of Filmhouse,” Udoh stressed.
The lawyer contended that the petitioner, not being a party to the Shareholders Agreement, lacks the standing to invoke its provisions in their claims against the respondents.
Udoh accused the petitioner of attempting to mislead the court with baseless allegations and urged Justice Inyang Ekwo to dismiss the motion.
Filmhouse Holding Limited, established in 2012 by Kenechukwu Mkparu, Moses Babatope, and Kene Okwuosa, has emerged as a significant force in the entertainment industry, focusing on movie distribution and cinema operations.
The founders aimed to address existing gaps in the cinema market, paving the way for enhanced access to film content in Nigeria.
Since its inception, Filmhouse has played a vital role in shaping the local film landscape.
