Zenon Petroleum wants court to wind up Ardova Plc over $6m debt

Zenon Petroleum & Gas Limited has asked a Federal High Court in Lagos to wind up Prudent Energy and Services Limited, which is the parent company of Ardova Plc over the inability of the company to pay $6 million.

In a statement seen by BusinessDay, the $6 million debt was alleged to have arisen from the sale conducted in 2018 where Zenon Petroleum & Gas Limited and its affiliates sold 74.02 per cent of the issued share capital of Forte Oil Plc (now Ardova Plc.) to Sowami and Ignite Investment & Commodities Limited.

It stated that as security for the deferred consideration for the sale of the shares, AbdulWasiu Sowami, the chief executive officer of Prudent Energy and Services Limited had provided a guarantee in favour of Zenon Petroleum & Gas Limited and its affiliates for the prompt payment of the deferred consideration as at when due.

From a copy of the petition, Zenon Petroleum & Gas Limited alleged that the sum of $6 million being part of the deferred consideration became due on June 18, 2022, and despite the demand letters served on Prudent Energy and Services Limited and its CEO, the debt was not paid.

“Zenon Petroleum & Gas Limited, therefore, urged the Court to wind up Prudent Energy and Services Limited on the ground of inability to pay its debts,” it added.

Read also: Building resilient organisations for sustainable success

Last month, Ardova Plc reported a loss of N3.8 billion for the year ended December 2021. The oil and gas giant also recorded a loss of N1.148billion in the half year (H1) ended June 30, 2022.

A closer look at the results indicates the company’s losses stem from a high cost of sales and operating costs eating into margins. For example, in 2021, the company spent 95percent of its revenue on the cost of sales compared to 93percent in 2020.

Ardova blamed the losses on its subsidiary, Axles & Cartage, a transport and haulage services business that commenced operations in August 2020. It also cited transformational challenges with its newly acquired Enyo Business.

“As a group, we were negatively impacted by our subsidiaries, Axles & Cartage Limited, which faced operational environment issues and the newly acquired Enyo, which is presently undergoing a transformation process to drive operational efficiency and profitability. When subsidiaries are taken into consideration the group loss amounts to N3.8bn,” Ardova said in its 2021 financial statement.

Last year (November 16), Ardova established its N60 billion bond issuance programme and announced the successful issuance of N11.444billion 7-year 13.3percent fixed rate bonds and N13.856billion 10-year 13.65percent fixed rate bonds being tranches A and B respectively of the series 1 bond under the Programme.

The company’s CEO Olumide Adeosun also blamed the losses on the “strategic inorganic growth programme of the company” which essentially is growth by acquisition.

“The loss experienced in 2021 are an expected reflection of the strategic inorganic growth programme of the company, and do not affect the viability of the company, especially as some of the immediate benefits of this programme were illustrated by the better year-on-year performance recorded in our Q1 2022 results,” Adeosun said.

He also stated once fully integrated, the acquisitions alongside the AP Renewables subsidiary will provide and safeguard Ardova’s capacity to thrive as global energy consumption tilts to cleaner sources.

Get real time updates directly on you device, subscribe now.