Lekoil Nigeria Limited has asked the court to punish Savannah Energy for contempt of court for proceeding with the Extraordinary General Meeting held on Thursday, April 7, 2022 despite an injunction issued by the court, and for encouraging the general public to discountenance the ‘BOUGHT’ court injunction.
Wole Olanipekun (SAN), appeared for Lekoil Nigeria Limited in the application filed by the company against Savannah Energy Plc, a subsidiary of Savannah Energy Plc at the Federal High Court of Nigeria in Lagos, on June 1, 2022.
Lekoil Cayman Limited, the second defendant in the suit that was filed to halt the EGM challenged the jurisdiction of the court to issue an order on a company without a physical presence or business in Nigeria.
The presiding judge, Justice Y. Bogoro, adjourned the hearing of the application by the plaintiff, Lekoil Nigeria, to June 20, 2022 and upon closure of the suit, the application challenging the court’s jurisdiction by Lekoil Cayman Limited will be entertained.
You may recall that, Lekoil Nigeria Limited, joined by a number of third parties including Lekoil Oil & Gas Investments Limited, Mayfair Assets & Trust Limited, Lekoil 276 Limited, and Lekoil Exploration & Production Nigeria Limited, was granted an injunction by the Federal High Court of Nigeria against Lekoil Limited and Savannah Energy Investments Limited restraining them from taking any steps in furtherance of the transfer of any interests in oil and gas assets of Lekoil Nigeria Limited and the transfer or creation of any interest in Lekoil Nigeria Limited, that will alter the ownership, equity or share capital structure of Lekoil Nigeria Limited.
Lekoil Nigeria had sought the injunction further to the announcement of February 28, 2022 by Lekoil Cayman Limited that it had entered into an agreement with Savannah Energy Investments Limited, a subsidiary of Savannah Energy PLC.
Prior to the injunction, Lekoil Cayman and Savannah Energy had scheduled an Extraordinary General Meeting (EGM) to hold on Thursday, April 7, 2022. Both companies proceeded with the EGM as scheduled, acting in defiance of the court injunction.
Is Nigeria missing out on higher oil prices?
Written by Lukman Otunuga, Senior Research Analyst at FXTM
Brent crude has gained roughly 57% since the start of 2022.
The global commodity remains supported by ongoing geopolitical risks and rising demand. As oil producers enjoy the rich bounties from surging commodity prices, some countries have failed to make the most of such an opportunity.
Nigeria’s sub-optimal oil production, poor infrastructure, and fuel subsidies have sapped the benefits from surging oil prices.
For other countries, the rally in oil prices means more foreign exchange reserves, higher revenues, and potential economic growth. In Nigeria’s case, this blessing could turn into a curse.
It is widely known that oil sales make a massive chunk of Nigeria’s export earnings and government revenues. Despite being Africa’s largest crude producer, the country exports the global commodity but imports all by-products amid the weak infrastructure.
So as oil prices rally, this could support earnings but also take a chunk out of foreign exchange earnings. It does not end here.
Anything that is left is devoured by petrol subsidies which are expected to cost the government almost $10 billion this year.
As FX reserves are drained this continues to worsen Nigeria’s problem of dollar shortages which has dragged the Naira lower. In January of 2022, the government postponed the planned petrol subsidy removal till further notice, citing “high inflation and economic hardship”.
Even if the government was to remove the subsidies in the future, the burning question is whether Nigeria has the ability to weather the storm such a move could create.
Focusing back on oil, the global commodity remains supported by supply concerns and prospects of higher demand after China relaxed lockdowns. Although various fundamental forces are pulling and tugging at oil, the path of least resistance remains north.
Oil benchmarks are trading near multi-year highs and have the potential to push higher in the near term. This could mean more for pain for Nigeria despite other oil producers cashing in and enjoying the commodities boom.
For more information, please visit: FXTM
Tinubu Speaks On Incessant National Grid Collapse
Presidential aspirant Bola Tinubu has blamed the incessant power failures assailing the country’s economy on the previous administration’s failure to heed his advice.
Mr Tinubu who made this revelation while speaking at a parley on Wednesday disclosed how he brought in major investors into the country.
The former governor boasted that he was the first governor to introduce the Independent Power Project in Nigeria.
“I am the first governor to bring Independent Power Project (IPP) to Nigeria. It was 300 megawatts. If they had followed my advice then, Nigeria will not be facing epileptic power supplies,” the former Lagos governor said.
Mr Tinubu, who has formally entered the presidential election race for 2023, hailed himself as the most qualified candidate, adding that his dream is for a country that is not a poverty index.
Nigeria’s power grid collapsed last Friday, the third time in less than four weeks.
In the wake of the latest grid collapse, Minister of Power Abubakar Aliyu on Saturday announced that an investigation had been launched into the recurring collapse.
On his part, works minister Tunde Fashola blamed unnamed vandals for the nationwide blackout reported after the national grid collapsed that occurred on Friday evening.
Savannah Acquisition in Jeopardy as Lekoil Shareholder files Winding up Petition
By Sandra Ani
Lekoil Nigeria Limited has filed a petition in the Grand Court of Cayman Island Court to request the just and equitable winding up of Lekoil Cayman to avert value loss by shareholders of the AIM-Listed company.
The petition was filed by Lekoil Founder and Chief Executive Officer of Lekoil Nigeria Limited, Mr. Olalekan Akinyanmi.
This new turn of events was disclosed by the Chairman of Lekoil Nigeria Limited, Mrs. Aisha Muhammed-Oyebode in a letter she wrote to shareholders of Lekoil Cayman.
Mrs. Oyebode called shareholders attention to the petition presented by the chief executive officer of Lekoil Nigeria Limited to wind up Lekoil Limited (the Company).
She said: “I write to you today to alleviate any concerns that you may have regarding this petition and assure you that that it is not the intention of Mr. Akinyanmi nor Lekoil Nigeria to compromise the integrity of your investment in the Company.
You may recall that I wrote to you in December 2020 following the requisition of an extraordinary general meeting by Metallon Corporation.
In my letter I foreshadowed the efforts to take over your Company by the back door by Metallon Corporation and various other activist institutional shareholders, without making a formal offer for your shares as required by the Company’s articles of association, and without offering fair value for your company”.
The Lekoil chairperson added that recent events have proved her predictions correct as the board of directors of the Company (the Board) have entered into agreements with Savannah Energy Investments Limited (Savannah), a wholly owned subsidiary of Savannah PLC, in an attempt to hand over control of and the entire assets of the Company have effectively been handed over to Savannah for £855,000 funding under a convertible funding agreement and US$1,000,000 funding under an option agreement. We believe the assets of the Company are conservatively worth in excess of US$500 million, with the producing asset of the Company’s Otakikpo asset alone is conservatively valued at US$200 million.
Explaining further, Mrs Oyebode said that “ in the absence of any substantial operations, the funding raised from Savannah will be applied to pay the fees of the directors and other advisers such as SP Angel and Tennyson Securities. Shareholders are unlikely to receive a penny of the funds raised by the Company, nor will they be invested in the underlying assets of the Company. The Board further announced on 1 April 2022, the fees to be paid to the directors of the Company for the current year (amounting to approximately US$290,000) and an intention to further dilute your shareholding (potentially by a further 20%, following on from the approximate 40% dilution that you have already suffered this year) through the issuance of shares pursuant to a contractor services arrangement”.
Lekoil Nigeria, according to her, has only ever sought to protect the interest of shareholders and create long term value for shareholders. Lekoil Nigeria has been committed to developing its assets and increasing production from its producing asset, Otakikpo.
It will be recalled that consistent with its efforts to protect the interests of shareholders, in December 2021 Lekoil Nigeria announced a cash offer to acquire shares of shareholders wishing to exit their investment at 1.9p and a share exchange offer for those shareholders wishing to continue in their investment in the Lekoil group. The Board however took steps to ensure that these offers could not be easily accepted by shareholders. Instead, the Board resolved to issue new shares to Savannah at 25% of the price offered for your shares by Lekoil Nigeria pursuant to the cash offer and effectively agreed to hand over the entire assets of Lekoil Nigeria Limited to Savannah for US$1,000,000 under the terms of the Option Agreement
that you are being asked to approve at the extraordinary general meeting scheduled for 7 April 2022 (whilst proposing to pay themselves approximately $300,000 per annum).
The Lekoil Nigeria chairperson further disclosed Lekoil Nigeria considers that the Board of Lekoil Cayman has knowingly entered into financing arrangements that will lead to a significant diminution in the value of your investment. This has been done intentionally and is the culmination of a takeover attempt orchestrated initially with Metallon Corporation and now being implemented with Savannah.
Explaining further, she said that “ In the circumstances, the chief executive officer, Mr. Olalekan Akinyanmi (who is the single largest non-institutional shareholder and the founder of the Company), had no choice but to petition the Grand Court of Cayman Islands (where the Company is incorporated) for a just and equitable winding up of the Company, on the grounds of the oppressive conduct of the Board, whilst at the same time seeking to set aside the agreements entered into with Savannah and the unauthorised issue of shares to Savannah and other parties.
“Shareholders should not however be alarmed. Mr. Olalekan Akinyanmi is seeking to ensure that shareholders that placed their trust in himself and the Company do not lose their investment as a consequence of the de facto takeover of the Company that the Board has concluded with Savannah. The petition together with the efforts to set aside of the transactions with Savannah are intended to ensure that the interest of shareholders are fully protected.
Shareholders should understand that the steps that have been taken by Mr. Akinyanmi, the founder of the Company, are intended to protect your interest. It is time now to place your faith in the right party”, she said.