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Lekoil suspended on AIM as Qatar questions validity of $184m financing deal

Shares in Nigeria oil firm Lekoil Limited have been suspended from trading on London’s AIM market as the validity of a proposed $184 million project financing was put in doubt.

Lekoil paid $600,000 to Seawave Invest Limited which introduced a group purporting to be Qatar Investment Authority, and arranged the previously announced $184 million financing deal.

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On January 2, Lekoil announced it had entered into a binding loan agreement with Qatar Investment Authority – with the deal arranged by independent consultancy Seawave Invest Limited.

Lekoil Monday told investors that it had now been approached by representatives of the Qatari Investment Authority questioning the validity of the loan agreement. In a stock market statement, the AIM-quoted company said: “Lekoil is urgently seeking to establish, alongside its legal counsel and nominated adviser, the full facts of this matter, and pending this clarification, the company has requested that its ordinary shares be suspended from trading on AIM with immediate effect”.

Lekoil noted that its financial exposure to the previously announced $184 million financing agreement currently stands at $600,000, which was the amount paid to Seawave as an initial arrangement fee, in its capacity as introducer to those purporting to be the QIA and lead adviser to the company in relation to the facility agreement, and associated legal fees. No money has been paid to the ‘presumed counterparty,’ Lekoil said.

Lekoil continues to generate positive cash flow at the operational level and will seek alternative funding for the future development of OPL 310 as a priority, including reactivating other existing funding discussions. The drilling of appraisal well within OPL 311is still expected to occur within the tenure of the license which expires on August 2, 2022.

As previously announced on 30 August 2019. Lekoil is required to pay Optimum Petroleum Development Company Limited (optimum) sunk cost and consent fees by February 2020 – a payment estimated at $10 million. Lekoil is also required to show its ability by Februanv 2020 to raise 42.86 percent of the drilling costs for one appraisal well, which is estimated to be about $28 million. Failure to make this payment on time may result in Lekoil and Optimum jointly seeking, and agreeing on a willing buyer to whom the transfer of Lekoil 17.14 percent participating interest in OPL 310 as well as all the financial obligations related to OPL 310 can be made.

The Company further confirms that no capital commitments have been made based on anticipated drawdowns, and that the Company will cover the cost of the site survey (estimated at $4m) on OPL 310 as announced on 10 January 2020 from a mixture of existing cash resources and income from operations at Otakikpo.

 

STEPHEN ONYEKWELU, with agency report

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