Shareholder agreement puts Akinyanmi in full control of Lekoil Nigeria

Against the backdrop of the announcement by Lekoil Cayman, the AIM-listed firm that the company’s CEO, Lekan Akinyanmi has been removed, an examination of the company’s listing document indicates he retains full control of Lekoil Nigeria, the company officially recognized by the Nigerian government as the custodian of its key oil and gas assets.

According to Lekoil Cayman’s admission document to the AIM, a market operated by the London Stock Exchange reviewed BusinessDay, Lekoil Cayman, registered in the Cayman Islands, is largely an investment vehicle which retains only 40 percent stake in Lekoil Nigeria (which holds all the company’s assets).

Following the announcement on June 2, of Akinyanmi’s removal as CEO of Lekoil, allegedly orchestrated by Metallon, a South African mining outfit who holds 15 percent majority stake in Lekoil Cayman, sources close to the matter disclosed that Lekoil Nigeria Limited, which announced Akinyanmi as its CEO in January 2021 is a separate entity from Lekoil Cayman.

Lekoil Nigeria is the custodian of oil and gas assets associated with the Lekoil brand and Akinyanmi remains in charge of the company. Lekoil Cayman, holds 40 percent stake in Lekoil Nigeria and lacks control power over the separate board which has mainly Nigerians.

All the assets, loans, goodwill the brand enjoyed as well as the challenges the company faced happened under the leadership of Akinyanmi who founded the company in 2010.

Lekoil Cayman’s board is constrained to dictate terms to Lekoil Nigeria with a Nigerian board due to provisions in the shareholder Agreement.

The company seems to be living through a risk it acknowledged as a possibility 8 years ago. Part 2 of the AIM Admission Document says:

“The Shareholders Agreement provides the Company (Lekoil Cayman) with greater rights over Lekoil Nigeria than a 40 percent shareholder would generally expect to have, including the right to appoint directors, the establishment of reserved matters and, most particularly, the right to a receive 90 per cent. of any dividend declared or 90 per cent of any capital which is returned to Lekoil Nigeria’s members.

“However, it must be noted the Company (Lekoil Cayman) is still a minority shareholder in Lekoil Nigeria and will remain so. Decisions made (or not made) by Lekoil Nigeria, which the Company does not and cannot directly control, are likely to have a material impact on the value of the Company’s stake in Lekoil Nigeria

Metallon Corporation which is a South African firm took advantage of a drop in Lekoil Cayman stock price in 2020 to amass 15 percent of its shares to takeover Lekoil Cayman with the expectation of gaining control of Lekoil Nigeria, but that has yet to succeed.

Sources close to the company said that prior to the Extra-ordinary General Meeting of Lekoil Cayman on January 8, 2021, these issues were clearly stated to Metallon’s representatives but it is unclear if they made an impact in their decision.

Olalekan has over 20 years experience in the oil and gas industry, most recently with Alliance Bernstein L.P. in New York where he spent six years as a research analyst and portfolio manager covering Energy and Materials worldwide.

Lekan has held senior positions at UBS Investment Research, 3Fold Ventures and Encabler Inc, a Californian headquartered technology company specialising in interactive television software, which he founded in June 2000, as well as successfully negotiating and raising the first round of equity capital for the Company’s operations.