Lekoil Nigeria offers shareholders buyback deal

Ahead of Lekoil Nigeria Limited annual general meeting taking place this December, the company has written to the shareholders of Lekoil Limited (Lekoil Cayman) with an “indicative offer to acquire Lekoil Limited shares and potential share exchange.”

In a letter signed Aisha Oyebode, chairman, Lekoil Nigeria Limited, the company said the Lekoil Limited shareholders “stand to suffer over a 40 percent dilution” of their shareholding to merely fund the salaries and costs of the board of Lekoil Limited if they failed to vote against the resolutions at the forthcoming Lekoil Cayman AGM.

Therefore, Lekoil Nigeria is offering to acquire Lekoil Limited shareholders’ “shares at a premium of 100 percent to the last trading price shares” prior to the Lekoil Limited suspension from trading or to acquire the “shares in exchange for the issuance of new shares in Lekoil Nigeria”.

The Nigerian oil firm has also promised to return to shareholders with a detailed offer on or before December 14, 2021.

Lekoil shareholders have been enmeshed in a dispute which culminated in the firing of its CEO, Lekan Akinyanmi in June over what it called governance breach arising from a loan dispute.

Akinyanmi however, retained control of the Nigerian unit of the company – Lekoil Nigeria, now seeking to buy back its shares.

Lekoil Ltd (Cayman) has a minority 40 percent 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 which entitles it to over 90 percent of the economic benefits of Lekoil Nigeria.

Metallon, the biggest stockholder in Lekoil Cayman with 15.1 per cent stake, 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. In September, Metallon sold its stake in Lekoil Cayman, driving down the company’s shares.

Read also: Over $27.3bn lost to salinity-induced soil degradation annually

This situation has left the London-listed Lekoil Cayman gasping for survival as it forages for cash to keep the company going.

In the letter to the Lekoil Cayman shareholders, Oyebode expressed displeasure over the company’s corporate governance practices.

“As fellow Shareholders, the board of directors of Lekoil Nigeria Limited (Lekoil Nigeria) received the AGM Notice and no doubt experienced the same dismay and disappointment as experienced by the many shareholders who have been in touch with us.

“The same board of directors of Lekoil Limited and activist Shareholders that asked you to place your trust in them and promised you improved corporate governance has displayed a pitiful disregard for corporate governance and a singular determination to steal your company. The board of Lekoil Nigeria believes that shareholders deserve an alternative option to that presented by the board of Lekoil Limited in the AGM Notice”

Oyebode inferred corporate governance hasn’t improved even after the Akinyanmi was ousted and may have worsened under Anthony Hawkins, an executive chairman,

“Mr Hawkins has clearly shown that he is not representing the interests of Shareholders as a whole, but that of a clique of Shareholders who have taken control of your company and whose behaviour since then has confirmed their sole intent was to gain outright control of the assets of Lekoil Nigeria,” she said.

Lekoil Cayman Limited was suspended from trading the company’s Ordinary Shares on the Alternative Investment Market (AIM) under Rule 19 and 40 with effect from October 1, 2021.

The admission to trading of the shares of Lekoil Limited has been suspended for over sixty (60) days leaving Shareholders in an illiquid investment and a company without regulatory oversight of AIM Regulation and the London Stock Exchange.