Leading Nigerian record label Chocolate City faces potentially losing majority control of the company to American entertainment giant Warner Music Group (WMG) under a recent UK court judgment.
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The judgement stems from a loan dispute between the Nigerian label and WMG’s subsidiary WEA International. It bars Chocolate City from early repayment of a $1.7 million convertible facility secured from WEA in 2019 and affirms the lender’s right to accept either loan repayment or 60% of the borrower’s equity as satisfaction when the credit facility matures in 2024.
The binding verdict blocks Chocolate City’s attempt to prepay the 5-year loan before maturity in order to prevent WEA converting it to a 60% stake at the future date. The High Court in London ruled such prepayment was not valid under the signed loan agreement.
Founded by Audu Maikori, Paul Okeugo and Yahaya Maikori, Chocolate City entered the $1.8 million loan deal with Warner Music to help finance its leading Nigerian musical acts and gain the global distribution clout of WMG.
But the partnership later soured resulting in this loan dispute and court case. The recent judgement, affirming WEA’s right to take equity or full repayment with interest, leaves Chocolate City potentially surrendering majority shareholding and control depending on WMG’s choice when the credit facility expires.
The outcome represents a reversal for Chocolate City while bolstering the ambitions of Warner Music, one of the “big three” recording industry giants, to expand its footprint and catalogue acquiring African talents.
Chocolate City CEO Abuchi Ugwu did not immediately respond to comments request on whether an appeal or settlement talks are being considered over the court loss.
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.
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