The crises rocking Lekoil, a London-listed oil firm with operations in Nigeria seems not to be over. The majority shareholder of Lekoil Cayman, Metallon has pulled out its 41 per cent stake.
A promising company with strategic national assets under its care, Lekoil Nigeria has interests in OPL 310 (17.14 per cent ), OPL 276 (45 per cent), the marginal Otakikpo field (40 per cent) and OPL 325 (62 per cent indirect interest).
Recall that the firm has been enmeshed in series of financial and boardroom in recent months with massive resignation of its Directors weighing down on its operations.
CEO, Lekoil Nigeria Limited, Mr. Lekan Akinyanmi, had in an interview on CNBC Africa on July 5 2021, noted that notwithstanding the management issues that have characterized the company in the past few months, he remains committed to delivering higher returns to Lekoil Nigeria Limited and Lekoil Limited (Lekoil Cayman) investors and other stakeholders.
The latest development may have sent shivers down the spines of investors as the value of the company’s shares dipped 41 per cent at 0.90 pence.
In a Regulatory note sighted at the weekend, Lekoil Ltd (Cayman) “notes that (it) is in dispute with Lekoil Nigeria about the day-to-day control of the Lekoil Group”
The fire ignited by the boardroom tussle among Lekoil shareholders had earlier consumed Akinyanmi in June retained control of the Nigerian arm of the company – Lekoil Nigeria. Akinyanmi was fired over what the company called governance breach arising from a loan dispute.
Lekoil Ltd (Cayman) has a minority 40 per cent stake in Lekoil Nigeria Ltd 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 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 the London-listed 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 London Stock Exchange.
“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.
The London-listed Lekoil Cayman admitted that it has limited control over the day-to-day operations of Lekoil Nigeria and its subsidiaries, and that it will take legal advice to recover as much value from its assets as possible.
Lekoil Limited has also said it intended to pursue its former CEO to recover the loan. It believes $800,000 is immediately payable, with $400,000 due on September 9.
Lekoil Limited 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 $260 million of equity on the London Stock Exchange and the majority of these funds were invested into Nigeria.
Lekoil Limited 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 per cent 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.