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Nigerian music company Chocolate City in trouble, may lose 60% shares…… + Details of the Loan agreement, and genesis of the Dispute!

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Chocolate City’s trouble is a fallout of a recent judgement of a High Court in London.

A leading Nigerian music company, Chocolate City, may lose as much as 60 per cent of its equity to an international partner, WEA International, a subsidiary of New York-based Warner Music Group (WMG).

This is a fallout of a judgement of the Commercial Division of a High Court in London on a loan dispute between the parties.

The judgement bars Chocolate City from prepaying a $1.7 million loan it took from the American record label ahead of the loan’s due date in 2024, while also affirming the lender’s right to choose to be paid back with 60 per cent of the borrower’s shares.

The judgement, delivered on 16 November, affirmed that WEA/WMG has the right to either choose to accept the payment with full interest at the due date or convert the loan to 60 per cent of Chocolate City’s shares.

The High Court’s decision put an end to the move by Chocolate City to exit the loan obligations early, to preempt the lender from taking the option of demanding 60 per cent of its shares as a means of offsetting the loan.

Chocolate City had sought to prepay the loan in 2022, whereas the loan has a term of five years, from 2019 to 2024.

In his judgement, a copy of which was obtained by PREMIUM TIMES, the judge, David Foxton, ruled that prepayment of the facility before the due date was not envisaged under the agreement the parties signed.

“There is no right to pay off any negative balance under the ADA Distribution Agreement before the Maturity Date or termination of the Facility (implicitly under clause 17.21),” the judge said.

Chocolate City, founded in 2005 by Audu Maikori, Paul Okeugo and Yahaya Maikori, obtained the loan in issue from WEA under a contractual agreement they entered into on 27 March 2019.

According to the court judgement, the agreement signed by the parties was for $1.8 million ($1,832,500) ‘Convertible Term Loan Facilities’.

A convertible loan is one which will either be repaid or, in most cases, converted into equity at a future date. It is a form of financing that ordinarily takes less time than an equity funding round, which can be costly and time-consuming.

The loan obtained from WMG was to be “payable in full or convertible into 60 per cent of the equity interests” of Chocolate City.

Promising deal

At the promising beginning of the deal, on 28 March 2019, a day after the agreement was signed, Warner Music Group (WMG) announced a pioneering partnership with Chocolate City.

Under the partnership listed on its official website, Chocolate City artistes would join WMG’s repertoire and receive the support of the company’s distribution and artiste services via its independent label services division, Alternative Distribution Alliance (ADA).

At the time, WMG said that the partnership with Chocolate City would dramatically grow the reach of African artistes worldwide and create new opportunities for global superstars in the region.

Under the terms of the deal, music from the label’s artistes would join Warner Music’s repertoire, and they would receive the support of the company’s global expertise, including distribution and artiste services via ADA.

WMG also promised financial support for Chocolate City to help achieve its mission of signing and developing the best local talent in this fast-growing market.

Chocolate City loan agreement details

Details of the loan deal were reproduced in the court’s judgement on the dispute that later ensued between the parties.

The judge referenced some pre-contractual documents signed by the parties for a better understanding of the deal.

The judge said the pre-contractual documents are not legally binding but help shed light on the unclear details of the contract itself.

Some of the documents include the Letter of Interest (LOI) dated 15 August 2018 which was signed by Chocolate City and Warner Music Inc (of which WEA is a part).

There was also a non-binding Term Sheet dated 17 January 2019 signed by Chocolate City and WEA.

Certain correspondences were also cited by the judge as helping to establish the facts and details of the loan agreement.

From the Letter of Interest, the judge said, the agreement was designed for WMG or its affiliate(s) to provide financing to Chocolate City “in the form of a convertible note”.

The loan was to be “payable in full or convertible into 60 per cent of the equity interests” of Chocolate City.

The judge referenced an email dated 27 September 2018 which WMG sent to Chocolate City, explaining what the “convertible loan structure” that parties had been discussing entailed.

WMG explained in the email that at the end of the term loan, that is, after five years, the investor (WMG) would have “the option of accepting a return in the form of principal plus interest or equity in the company”.

In response to the clarification by WMG, the judge said while reviewing the documents filed by the parties to the case, Chocolate City responded by stating, “We are aligned”, and “We are happy to move ahead with the deal.”

In the Term Sheet which the parties also signed, it was stated under the ‘Proposed Transaction’ section that the transaction was an investment “by way of secured loan, convertible into equity in the Company at the Lender’s option at the Maturity Date.”

How dispute started

By 2022, Chocolate City had drawn down on the $1.8 million facility to $1.7 million.

Dispute between the parties over the facility began to rear its head when, on 8 September 2022, Chocolate City served a prepayment notice on WEA, indicating its decision to prepay the full amount of the loan together with accrued interests on or before 20 December 2022.

Citing Clauses 8.3(a) and (b) of the Facility Agreement, Chocolate City asserted its right to prepay the loan, and requested that WEA provide its bank details for prepayment to be made.

On 13 September 2022, WEA responded that Chocolate City was not entitled to make a prepayment. Therefore, WEA did not provide its bank details.

Chocolate City then filed an application in court for summary judgment seeking declarations to the effect that it is contractually entitled to prepay the amount outstanding under a convertible term loan facility ahead of the specified maturity date.

Chocolate City was represented by Nathan Searle and George Harnett of Hogan Lovells International LLP.

WEA, represented by Tamara Oppenheimer KC and Gillian Hughes of Dentons UK and Middle East LLP, cross-applied for summary judgment for a declaration that Chocolate City is not entitled to prepay the facility.

Citing Clause 7 of the loan agreement, WEA insisted that “the borrower shall repay the loans in full together with any interest accrued on the Maturity Date”.

Judgement

In his judgement, Mr Foxton ruled that prepayment of the facility before the due date was not envisaged under the agreement.

This finding, the judge said, tallies with WEA’s rights recognised in clause 7 of the facility up to the maturity date.

He said the clause “presupposes that the Facility will only be terminated on the Maturity Date or pursuant to early termination under clause 17.21.”

The judge, who said WEA’s interpretation of the agreement was more acceptable than Chocolate City’s, said he was satisfied that “the commercial purpose of the transaction” affirmed WEA’s construction of the agreement.

He said the loan agreement “gave WEA an embedded right to swap the outstanding debt for equity at the Maturity Date if it decided it was in its economic interests to do so.”

“That commercial purpose lends strong support to WEA’s construction, but Chocolate City’s construction would be inimical to it,” the judge said.

In conclusion, Mr Foxton noted that “Chocolate City does not have a real prospect of establishing a right to prepay the loan made to it by WEA, and WEA’s construction is correct. Chocolate City fails on its application for summary judgment, and WEA succeeds on its cross-application for summary judgment.”

Implication for Chocolate City

The judgement, affirming WEA/WMG’s interpretation of the agreement, gives the American conglomerate the discretion to accept payment in cash or convert the loan sum to 60 per cent of Chocolate City’s equity when the facility is due for repayment.

The judge ruled that it was at WMG’s sole discretion to decide whether all or a portion of the loan “be converted into an unrecouped balance under the Distribution Agreement”.

PT contacted Chocolate City’s CEO, Abuchi Ugwu, on the phone on Wednesday to find out if the company will appeal against the judgement or has other plans to avert losing a majority of its shares to its estranged partners. Mr Ugwu asked our correspondent to email the questions to him, but he has yet to respond to our email enquiry as of the time of filing this report.

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.

But the artistes currently on the label are Tariq, Noondave, YoungJohn, Blaqbonez, CandyBleakz and MajorAJ.

Source: Premium Times.

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15 Years After, Best Of Nollywood To Collaborate With Group 8 On BON Awards

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– As Seun Oloketuyi Steps Down As CEO, Appoints Feranmi Olaoye Executive Producer

After a 15-year eventful milestone, Best of Nollywood (BON) has disclosed a strategic collaboration with Group 8 LTD for the next five editions of the BON Awards. Group 8 LTD, a media-tech organisation renowned for its diverse mass and new media assets, including Soundcity, Trybe TV, OnTV, Spice TV, and other networks, will contribute its expertise to elevate innovation in media and communications for the prestigious awards.

Simultaneously, Seun Oloketuyi, the Founder and Chief Executive Officer of Best of Nollywood (BON) Awards, is stepping down from the leadership position. In his place, Feranmi Olaoye has been appointed as the Acting Executive Producer of the Awards, effective immediately. Olaoye will be supported by a soon-to-be-announced nine-member Advisory Board, which will also have Oloketuyi as a member.

The collaboration with Group 8 LTD aims to ensure the seamless and enhanced delivery of Nigeria’s longest-running award production.

Best of Nollywood Awards, an annual event celebrating exceptional achievements in the Nigerian film industry, had its inaugural edition on December 6, 2009, in Ikeja, Lagos State.

Looking ahead, the 2024 edition of the BON Awards is scheduled to take place in Enugu come November 2024.

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Lifestyle editor Tomi Falade set to unveil two books

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Nigerian writer, journalist and author Tomi Falade is set to unveil two literary exploits on Sunday, February 11.

The event is billed to be hosted by Gbenga Adeyinka 1st at De Rembrandt Hotel, Alausa, Lagos and will see Falade unveiling her first two books, ‘OLOBUN: Matriarch Of Ondo, Mother Of Legacy’, and ‘Dates From Hell.’

Falade, an entertainment editor with Independent Newspapers Ltd, opened up on her foray into the world of writing as an author and journalism saying, “My love for literature is what led me to journalism, and after over a decade in the media industry, my flair for telling extraordinary stories has not waned. I believe it is time to share another facet of my literary exploits with the world in drama and story form.”

On why she chose to launch the two books together, she revealed that it was mere coincidence.

“The plan was to originally launch Dates From Hell in 2023, but prevailing circumstances at the time made me move it to 2024. Now that the two books are ready I just thought that I could do both at the same time, so here we are. This is why I tagged the event a book party.

“Many people do not realise that literature can be fun, this event is to show that we can genuinely have fun with literature.”

‘OLOBUN: Matriarch Of Ondo, Mother Of Legacy’ is a rich drama set in 15th-century Oyo and explores themes of adventure, exile, and the birth of the lasting legacy of the Ondo Kingdom while ‘Dates From Hell’ is a collection of short stories based on true events of people on romantic dates.

Tomi’s flair for scripting extraordinary stories is evident in her extensive body of work, which includes well over a thousand stories and articles. Her portfolio encompasses a variety of genres, with dozens of published features and investigative stories that reflect her commitment to delivering compelling narratives.

As the Life Editor (Saturday) at Independent Newspapers Ltd, Tomi Falade continues to shape the literary landscape with her editorial expertise and keen storytelling acumen. Her ability to capture the essence of human experiences and translate them into captivating narratives has earned her respect and admiration within and beyond the journalism community.

“Dates From Hell” is poised to captivate readers with its promise of gripping tales, showcasing Tomi Falade’s unique storytelling style. OLOBUN is a recapturing of history reminiscent of the great playwrights of old. With her literary prowess, Tomi remains a noteworthy figure in Nigerian literature, leaving an indelible mark with each piece she crafts.

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FULL LIST: 2024 Grammy Award Winners…..

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It was a poor outing for Nigerian artistes, none of whom bagged an award at the 66th Grammy Awards ceremony held at the Peacock Theatre in Los Angeles., United States on Sunday.

Five artistes of Nigerian descent – David Adeleke, aka, Davido; Damini Ogulu, aka Burna Boy; Ahmed Ololade, aka Asake; Olamide Adedeji, aka Baddo; and Oyinkansola Aderibigbe, aka Ayra Starr; all lost out of the Grammy in their combined 10 nominations across different award categories.

In November 2023, the five artistes were nominated for the 2024 Grammy Awards.

Below is the full list of winners of the 66th Grammy Awards:

Best African Music Performance

Amapiano – Asake and Olamide

City Boys – Burna Boy

Water – Tyla WINNER

Unavailable – Davido Featuring Musa Keys

Rush – Ayra Starr

Best Melodic Rap Performance

Sittin’ On Top Of The World – Burna Boy Featuring 21 Savage

Attention – Doja Cat

All My Life – Lil Durk Featuring J. Cole WINNER

Spin Bout U – Drake & 21 Savage

Low – SZA

Best Global Music Album

Epifanías — Susana Baca

History — Bokanté

I Told Them… — Burna Boy

This Moment – Shakti WINNER

Timeless — Davido

BEST RAP ALBUM

Her Loss – Drake & 21 Savage

Michael – Killer Mike WINNER

Heroes & Villains – Metro Boomin

King’s Disease III – Nas

Utopia – Travis Scott

PRODUCER OF THE YEAR, NON-CLASSICAL

Dernst “D’Mile” Emile II

Jack Antonoff – WINNER

Hit Boy

Metro Boomin

Daniel Nigro

SONGWRITER OF THE YEAR, NON-CLASSICAL

Edgar Barrera

Jessie Jo Dillon

Shane McAnally

Theron Thomas – WINNER

Justin Tranter

Best Global Music Performance

Shadow Forces – Arooj Aftab, Vijay Iyer & Shahzad Ismaily

Alone – Burna Boy

Pashto – Béla Fleck, Edgar Meyer & Zakir Hussain Featuring Rakesh Chaurasia WINNER

FEEL – Davido

Milagro Y Desastre – Silvana Estrada

Abundance In Millets – Falu & Gaurav Shah (Featuring PM Narendra Modi)

Best Album Notes

Evenings At The Village Gate: John Coltrane With Eric Dolphy (Live)

Written In Their Soul: The Stax Songwriter Demos – WINNER

I Can Almost See Houston: The Complete Howdy Glenn

Mogadishu’s Finest: The Al Uruba Sessions

Playing For The Man At The Door: Field Recordings From The Collection Of Mack McCormick, 1958–1971

Best Boxed Or Special Limited Edition Package

The Collected Works Of Neutral Milk Hotel

Gieo

For The Birds: The Birdsong Project – WINNER

Inside: Deluxe Box Set

Words & Music, May 1965 – Deluxe Edition

Best Music Film

How I’m Feeling Now -Lewis Capaldi

Live From Paris, The Big Steppers Tour – Kendrick Lamar

Moonage Daydream – David Bowie WINNER

I Am Everything – Little Richard

Dear Mama – Tupac Shakur

Best Music Video

In Your Love – Tyler Childers

I’m Only Sleeping – The Beatles WINNER

What Was I Made For – Billie Eilish

Count Me Out – Kendrick Lamar

Rush – Troye Sivan

Best Song Written For Visual Media

Barbie World [From “Barbie The Album”]

What Was I Made For? [From “Barbie The Album”] – WINNER

Dance The Night [From “Barbie The Album”]

I’m Just Ken [From “Barbie The Album”]

Lift Me Up [From “Black Panther: Wakanda Forever – Music From And Inspired By”]

Best Score Soundtrack for Video Games and Other Interactive Media

Call Of Duty®: Modern Warfare II – Sarah Schachner

Hogwarts Legacy – Peter Murray, J Scott Rakozy & Chuck E. Myers “Sea”, composers

Star Wars Jedi: Survivor – Stephen Barton & Gordy Haab WINNER

God Of War Ragnarök – Bear McCreary, composer

Stray Gods: The Roleplaying Musical – Montaigne, Tripod & Austin Wintory, composers

Best Score Soundtrack For Visual Media (Includes Film And Television)

Black Panther: Wakanda Forever – Ludwig Göransson

Indiana Jones And The Dial Of Destiny – John Williams

Oppenheimer – Ludwig Göransson WINNER

Barbie – Mark Ronson & Andrew Wyatt

The Fabelmans – John Williams

Best Compilation Soundtrack For Visual Media

Aurora

Barbie The Album – WINNER

Black Panther: Wakanda Forever

Guardians of the Galaxy, Vol. 3: Awesome Mix, Vol. 3

Weird: The Al Yankovic Story

Best Comedy Album

I Wish You Would – Trevor Noah

I’m An Entertainer – Wanda Sykes

What’s In A Name? – Dave Chappelle – WINNER

Selective Outrage – Chris Rock

Someone You Love – Sarah Silverman

Best Engineered Album, Non-Classical

Desire, I Want To Turn Into You

History

Jaguar II – WINNER

Multitudes

The Record

Best Immersive Audio Album

God Of War Ragnarök (Original Soundtrack)

Act 3 (Immersive Edition)

The Diary Of Alicia Keys – WINNER

Blue Clear Sky

Silence Between Songs

Best Historical Album

Fragments – Time Out Of Mind Sessions (1996-1997): The Bootleg Series, Vol. 17

Written In Their Soul: The Stax Songwriter Demos – WINNER

The Moaninest Moan Of Them All: The Jazz Saxophone of Loren McMurray, 1920-1922

Playing For The Man At The Door: Field Recordings From The Collection Of Mack McCormick, 1958–1971

Words & Music, May 1965 – Deluxe Edition

Best Tropical Latin Album

Voy A Ti – Luis Figueroa

Siembra: 45º Aniversario (En Vivo en el Coliseo… – Rubén Blades… WINNER

Niche Sinfónico – Grupo Niche Y Orquesta Sinfónica Nacional de Colombia

VIDA – Omara Portuondo

MIMY & TONY – Tony Succar, Mimy Succar

Escalona Nunca Se Había Grabado Así – Carlos Vives

Best Gospel Album

I Love You – Erica Campbell

Hymns (Live) – Tasha Cobbs Leonard

The Maverick Way – Maverick City Music

All Things New: Live In Orlando – Tye Tribbett WINNER

My Truth – Jonathan McReynolds

Best Roots Gospel Album

Tribute To The King – The Blackwood Brothers Quartet

Echoes Of The South – Blind Boys Of Alabama WINNER

Songs That Pulled Me Through The Tough Times – Becky Isaacs Bowman

Meet Me At The Cross – Brian Free & Assurance

Shine: The Darker The Night The Brighter The Light – Gaither Vocal Band

Best Rap Album

Her Loss – Drake & 21 Savage

MICHAEL – Killer Mike WINNER

HEROES & VILLIANS – Metro Boomin

King’s Disease III – Nas

UTOPIA – Travis Scott

Best R&B Album

Girls Night Out – Babyface

JAGUAR II – Victoria Monét WINNER

What I Didn’t Tell You (Deluxe) – Coco Jones

Special Occasion – Emily King

CLEAR 2: SOFT LIFE EP – Summer Walke

Best Remixed Recording

Alien Love Call

New Gold (Dom Dolla Remix)

Reviver (Totally Enormous Extinct Dinosaurs Remix)

Wagging Tongue (Wet Leg Remix) – WINNER

Workin’ Hard (Terry Hunter Remix)

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