Lekoil Nigeria kicks as parent company sells material interest to Savannah Energy

The Nigerian unit of Lekoil Cayman, Lekoil Nigeria is kicking against the company’s decision to allot 20 percent of the company share’s to Savannah Energy, saying it is being sold below market value.

On February 28, Lekoil Cayman announced it has entered into a convertible facility agreement and option agreement with Savannah Investments in order to support the Company’s restructuring.

Savannah Investments is a wholly-owned investment vehicle of Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter in Africa.

Lekoil Cayman said it has entered into the CFA with Savannah Investments whereby Savannah Investments will support LEKOIL’s proposed restructuring by providing it a GBP 0.9 million loan, a work around to the suspension of the company’s shares on the AIM.

The CFA was supposed to be repayable on March 2, and bears interest at 5 percent per annum. However, in the event of non-payment by LEKOIL, Savannah Investments may elect to convert the outstanding amount into 177.1 million new ordinary shares of Lekoil Limited at a price of 0.5 pence per share.

Lekoil Cayman said it was forced to take the measure because its Nigerian unit, Lekoil Limited, was starving it of working capital and Lekan Akinyanmi, head of the Nigerian unit was yet to repay the loan he took from the company.

“The initial steps in the planned restructuring are expected to see LEKOIL enforce our legal rights in relation to our 40 percent legal and 90 percent economic equity ownership, the recovery of the intercompany debt investments in Lekoil Nigeria group and the US$1.6 million loan owed by (Lekan) Akinyanmi to LEKOIL, and engage directly with these parties in relation to this,” said Tony Hawkins, Interim Executive Chairman of LEKOIL.

Read also: LEKOIL names Savannah Energy as restructuring partners

Lekoil Nigeria said the Lekoil Cayman/Savannah agreement effectively “gifted” Savannah Energy a material interest in the business, essentially enabling Savannah Energy to “acquire” her stake at below market rate and substantially lower than the value of the offers previously tabled by Lekoil Nigeria to all shareholders.

Lekoil Nigeria said the questionable conduct of the Lekoil Cayman Board and the improper share allotment that took place on March 11, 2022, is still a sore point that needs to be thoroughly examined for the greater good of the shareholders.

Lekoil Nigeria had dragged its parent company to the Grand Court of the Cayman Islands to stop the CFA but on March 10, the court discharged the injunction bought by Akinyanmi on the issuance of shares.

Lekoil Nigeria has been embroiled in a corporate dispute with its parent company, Lekoil Cayman which started after the local unit headed by Akinyanmi was accused of abuse of corporate governance.

The local unit sought to remove itself from the control of its parent company but with the parent company owning 40 percent interest in the local unit and entitled to 90 percent of the economic benefits, things got complicated.
Lekoil Nigeria had attempted to acquire the parent company but that offer was rejected by shareholders. Handing over the Lekoil Limited shares effectively in the control of Savannah Energy adds a new twist to the corporate drama unfolding at Lekoil.