By Muyiwa Lucas
The London Stock Exchange (LSE)-listed oil firm with operations in Nigeria, Lekoil Limited, has suffered 41 per cent crash in its shares as the pullout by the majority shareholder of Lekoil Cayman, South African miner, Metallon, reportedly weighed in on the company. The value of the company’s shares dipped 41 per cent at 0.90 pence, sending jitters down the spines of investors.
In a regulatory note sighted by Platforms Africa, Lekoil (Cayman) “notes that (it) is in dispute with Lekoil Nigeria about the day-to-day control of the Lekoil Group …”
Genesis of crisis
The fire ignited by the boardroom tussle among Lekoil shareholders has earlier affected the Chief Executive Officer, Lekan Akinyanmi. Akinyanmi was removed over what the company called governance breach arising from a loan dispute. He however, retained control of the Nigerian arm of the company – Lekoil Nigeria. Lekoil Limited (Cayman) has a minority 40 percent stake in Lekoil Nigeria Limited and Akinyanmi was the CEO of the entire operation prior to his ouster.
The Nigerian unit was financed by loans acquired through Lekoil Cayman and is entitled to over 90 percent of the economic benefits of Lekoil Nigeria.
Metallon’s pull out
Metallon with 15.1 per cent stake in Lekoil Limited was accused of staging a hostile takeover last year when it convinced other shareholders to turn the heat on Akinyanmi, who it accused of poor governance practices. The departure of Metallon creates more uncertainty for an already troubled company.
This situation has left Lekoil Cayman gasping for survival as it forages for cash to keep the company going. The task of raising financing may become tougher considering that Lekoil Cayman has been unable to publish its annual financial report in June. It has asked for more time from its regulator on the LSE.
“The company has received notification from Lekoil Nigeria that it intends to abide by the Shareholders Agreement but that governance decisions, including decisions related to budgets, financial, operational and business plans, shall be made by Lekoil Nigeria,” said the note from Lekoil. However, Lekoil Nigeria said it will no longer fund any of the costs of the Company from the cash flow generated from its producing asset, Otakikpo.
Lekoil’s reaction
Lekoil Cayman admitted that it has limited control over the daily operations of Lekoil Nigeria and its subsidiaries, and that it would take legal advice to recover as much value from its assets as possible. Lekoil has also said it intended to go after its former CEO to recover the loan. It believes $800,000 is immediately payable, with $400,000 due yesterday.
Lekoil provided the majority of funding for the acquisition of the Lekoil Nigeria assets, as well as working capital for a period of time. The company said it raised over $260million of equity on the LSE and the majority of these funds were invested in Nigeria.
Threats, ‘gloomy days’ ahead
Lekoil is seeking to raise a convertible facility agreement (CFA) worth £200,000 from Hadron Master Fund and TDR enterprises to fund its legal battle against Lekoil Nigeria. Hadron is linked to a company that has a 4.66 percent stake in Lekoil. TDR is controlled by Tom Richardson, who Metallon backed as a non-executive director of Lekoil. An unnamed third party will also provide some cash.
- Culled from Platforms Africa
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