Following the announcement of 28 February 2022 by Lekoil Limited that it had entered into an agreement with Savannah Energy Investments Limited, a subsidiary of Savannah Energy PLC, 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, has sought and been granted an injunction in the Federal High Court in Lagos, 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.
Accordingly, the following resolutions to be voted on at the forthcoming Extraordinary General Meeting convened by Lekoil Limited for Thursday 7th April 2022 have been injuncted by the order of the Federal High Court of Nigeria:
· approving the Option Agreement entered into with Savannah Investments, in accordance with the requirements of Rule 15 of the AIM Rules.
· authorising the Directors to allot and issue fully paid ordinary shares up to an aggregate number of 151,755,547, which is approximately 20 percent (20%) of the Company’s current issued ordinary share capital.
Reacting to this development, the Board of Lekoil Nigeria said it is delighted that the injunction has been granted, prohibiting a substantially dilutive issuance of equity and an option agreement with Savannah Energy Investments Limited which would have denied shareholders of significant value.
Meanwhile, Lekoil Limited has rejected the offer by Lekoil Nigeria to purchase the OPL310 loan.
According to a statement from Lekoil Limited, it states that: “LEKOIL (AIM: LEK), the oil and gas exploration and production company with a focus on Nigeria and West Africa, said it has noted the announcement from Lekoil Nigeria, dated 1 April 2022, offering to purchase the OPL 310 loan and to repay the outstanding amount under the Savannah Energy Investments Limited Convertible Facility Agreement (“Savannah” and “Savannah CFA”).
“The Company notes that neither offer is capable of acceptance without the Company being in breach of written legally binding obligations to Savannah. For that reason, the Company will not be accepting the offer.”
According to Anthony Hawkins, the Company’s Interim Executive Chairman, he said: “The offer by Lekoil Nigeria to purchase the OPL 310 loan and the outstanding amount under the Savannah Convertible Facility Agreement is not capable of acceptance as it would put the Company in breach of its legally binding contractual obligations to Savannah.
Furthermore, even if the offer was capable of acceptance, it is not clear that it would be a superior offer for the following reasons: (i) Lekoil Nigeria has not demonstrated the capability to fund the offer; (ii) it has not, since 2013, shown any evidence of the ability to fund the appraisal and/or development of OPL 310 (the licence for which is due to expire in August 2022 due to inactivity); (iii) it would be using Group cash to which the shareholders already have an entitlement to; and (iv) it has chosen to conduct the negotiation process by way of public announcement rather than private dialogue with the Company.
For these reasons, the offer should not be seen as a serious attempt to provide an alternative to the Company and its shareholders but as an attempt to muddy the waters prior to the Extraordinary General Meeting (“EGM”). I would encourage shareholders to vote by way of proxy at the EGM in favour of the resolutions.“
Olusola Bello
