First Atlantic Bank Is Merging

Our new partner in ERHC, First Atlantic Bank - where the owner of a rival bidder (Fobi Engineering) is a member of the Board of Directors - is in the processing of merging with three other Nigerian banks. This has come about after the government decided that all Nigerian banks should have a minimum deposit base of Na. 25 billion ($1 = 133 Naira). At least 16 banks are consolidating into four new banks composed of four original banks each. First Atlantic Bank barely had the required amount before they acquired 60 million shares worth Na 3.7 billion from ERHC chairman Sir Emeka Offor in settlement of a U.S. lawsuit. The other three banks in the First Atlantic group are about the same size. The value of the ERHC stock at recent prices (.46 - .48) is equal to around 12 percent of First Atlantic's deposits.

That brings up lots of questions, but for me it's the starting point for some advice I'd give Mr. Fobi, who like Offor is also an Igbo tribal chief (the two may be distantly related). If I were him, I would withdraw my $90 million bid for one of the blocks and use whatever money I may have saved (had I intended ever to pay the signature bonus) to use the money to add to my holdings in the stock of First Atlantic Bank (which has risen substantially since the settlement). After bids are awarded, the bank's 60 million shares will be rising, remember, at the rate of US$600,000 for every 1 cent in price, and as oil exploration, discovery and production occurs that could quickly become hundreds of millions of dollars. Since Fobi's bid is hopelessly low for the block they bid on and is likely to lose (as his higher bid also lost in the first round), the alternative investment is the better one. It would also likely lead to revenue from dividends. Who knows how much money the stock will generate as time unfolds its many surprises?