It all began in 1977, when 3 young Nigerian Doctors, who just returned from overseas decided to come together to set up a hospital. One of them practiced Medicine, the other was a surgeon and the third was a gynecologist. They converted an apartment owned by one of them, which was located in Alhaji Danmole Street, Surulere, Lagos into their specialist hospital and shared the rent equally. They named the hospital Mercy Specialist Hospital and began operations in 1977. They quickly gained popularity among lower and middle-class Nigerians and attracted many patients due to their versatility.
Interestingly, the 3 doctors worked at the teaching hospital in Lagos but managed their hospital part-time. A model still being used today by many medical practitioners. But as with anything in Nigeria, their luck would soon run out as the then Military Ruler General Obasanjo promulgated a decree. The decree said as a medical doctor you were not allowed to work in a teaching hospital and have a private practice at the same time. And so, the trio had a huge decision to make on whether to face the rough seas of the corporate world or remain employees of the government. After some advice and soul searching, they decided to take their fate into their own hands, took a bank loan, and went full-time. And so, in 1982, Alexander Eneli, Sunday Kuku, and Augustine Obiora came together to cofound a hospital named EKO Hospital Ltd.
The hospital name was coined from the first letter of their surnames.
The hospital opened its first branch in Ikeja on Mobolaji Bank Anthony Way and opened another branch in Surulere some years after. With time, the hospital became one of the most popular hospitals in Nigeria and quickly became famous for treating the upper middle-class and rich Nigerians.
By 1991 the hospital became a PLC and would change its name to Eko Corp Plc by 1994, when it was listed on the Nigerian Stock Exchange.
Things went well for the hospital for over 2 decades until after the millennium when it started experiencing cash flow challenges. Despite the marginal growth in revenues, Eko Corp still faced cash flow problems and it was owed hundreds of millions of Naira.
Things got so bad, that they started owing salaries and could not pay their founding directors their emoluments and benefits promptly.
At some point between 2004 and 2012, it owed the Joint Chief Medical Directors (JCMDs) about N107 million.
A breakdown of the amount showed the company owed Eneli N27 million, Kuku N43 million, and Obiora N42 million; respectively.
Tragedy however struck in December 2005, when one of its cofounders Dr Eneli, died at the hospital after a brief illness.
Following his death, the company decided to raise funds which will be used to repay the JCMDs as well as provide working capital.
They also got the JCMDs to agree to convert about 75% of what is being owed into equity, while they source for cash to pay the balance.
Around that time the company had reported that it owed the JCMDs and one of its directors (F.G.A Cole) about N118 million.
The company then decided it was time to go and source equity investment from an investor looking to own part of what was at the time one of Nigeria’s most popular hospitals.
Sometime in 2007, Eko Corp approached Dr Geoffrey Ohen of Geoff Ohen Ltd to invest in Eko Corp Plc. Dr. Ohen was already a shareholder in the hospital and an oil and gas magnate. The source of his wealth is unknown.
Dr. Ohen or his company was said to own just 63 million shares in Eko Corp at the time while the doctors owned about 56 million each. Jointly, they still had majority shares and as partners and “brothers” would always make decisions in their collective best interest.
And so, they offered Geoff Ohen Ltd 110 million units at N4 a share, hoping to raise at least N440 million in cold cash. The deal as allegedly agreed by the parties will have Eko Corp pay the JCMDs 25% of the outstanding in cash and convert the balance to equity.
The board of directors quickly approved the deal and cash was paid to the JCMDs while they fixed a date for an AGM to ratify the deal and get shareholders to approve an increase in share capital to accommodate the new shares that will be issued for the 75% debt-equity swap.
The AGM date was fixed for some time in October of 2007 to give everyone time to revel in what was at the time a win-win for all.
Unbeknownst to the JCMDs, Dr. Geoff Ohen had a different approach to winning. After all, what was a victory without losers?
Geoff Ohen Ltd had all through the time “surreptitiously” acquired shares in Eko Corp, previously owned by GTB and Secure Swaps Ltd.
Interestingly, the GTB and Secure Swaps’ shares were under litigation but good old Dr. Geoff had convinced the Eko Corp directors to drop the suit in the spirit of good sportsmanship. After all, he had just dropped a whopping N440m, so surely it was in everyone’s best interest.
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