December 03, (THEWILL) – Nigerian music company, Chocolate City, founded in 2005 by the trio of Audu Maikori, Paul Okeugo and Yahaya Maikori, is at risk of losing up to 60 per cent of its equity to partner, WEA International, a subsidiary of Warner Music Group (WMG) based in New York. This development arises from a loan dispute between the two entities, with the commercial division of a High Court in London ruling against Chocolate City’s attempt to prepay a $1.7 million loan from WMG before its due date in 2024.
The judgement affirms WEA/WMG’s right to choose repayment with 60 per cent of Chocolate City’s shares, a decision that could significantly impact the Nigerian music powerhouse. The court’s decision concludes Chocolate City’s effort to exit the loan obligations early, preventing the lender from opting for a 60 per cent share conversion to offset the loan. The loan, obtained in 2019, was to be repaid or converted into a substantial portion of Chocolate City’s equity.
The judge, David Foxton, emphasised that prepayment before the due date was not envisaged in the agreement signed by the parties. This ruling effectively grants WEA/WMG the discretion to accept payment with full interest at the due date or convert the loan to 60 per cent of Chocolate City’s shares. The loan agreement, outlined in court documents, reveals the complex nature of the financial arrangement, with the potential for equity conversion at the end of the loan term.
The court’s reliance on pre-contractual documents and correspondences provided an insight into the agreement’s details. The partnership between Chocolate City and WMG, announced in 2019, initially showcased promises of global reach for African artistes and new opportunities for regional superstars. However, the recent legal dispute has added uncertainty to the collaboration.
Chocolate City has been home to recording artistes, such as M.I Abaga, Nosa, Dice Ailes, Victoria Kimani, Ice Prince, DJ Caise, DJ Lambo, Jeremiah Gyang, Ruby Gyang, Pryse, Brymo, Koker, Jesse Jagz, Lemon Adisa, Mr Gbafun, Ijay, and Kahli Abdu, VHS Safari and more. Artists currently on the label are Tariq, Noondave, YoungJohn, Blaqbonez, CandyBleakz and MajorAJ.
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