The leadership tussle in Lekoil Nigeria, an indigenous oil company, deepened last week when the Cayman Island-based Lekoil Limited announced that Lekan Akinyanmi’s employment contract as the Chief Executive Officer had been terminated by minority shareholder, South Africa’s Metallon Corporation, a company with 15 per cent equity in Lekoil Cayman and 40 per cent shareholding in Lekoil Nigeria.
Lekoil Nigeria and Lekoil Cayman are associated companies with separate boards of directors and operating assets in Nigeria. Lekoil Cayman is a fund-raising entity.
Lekoil Cayman had alleged that in late 2020, Akinyanmi, without the prior knowledge or consent of the company, entered into an employment contract with Lekoil Nigeria Limited, to act as its Chief Executive Officer, with effect from 1 January 2021.
“The company has been advised that this represents a conflict of interest and is a breach of his employment contract with the company. This was one of the reasons for the termination of his employment contract with the company.”
Lekoil Cayman said that it was aware that “Lekoil Nigeria has stated that Akinyanmi remains its Chief Executive Officer and that it would seek to ensure that Akinyanmi be restricted from continuing in this role in that capacity, as per the provisions of his employment contract with the company. The company reserves its rights to challenge the validity of any actions in breach of these provisions and would advise relevant parties to seek the relevant legal advice,” Lekoil Cayman stated in a statement.
However, immediately the termination of Lekan Akinyanmi was announced, Lekoil Nigeria Limited shareholders countered Lekoil Cayman’s statement, insisting that Lekan Akinyanmi remained their Chief Executive Officer.
In a statement made available to ENERGY TIMES, Lekoil Nigeria shareholders insisted that Metallon Corporation, a minority shareholder, could not dictate to the company’s majority shareholders.
They said that the Admission Document with which the company was listed on AIM and which is available on the Lekoil website, indicates that Lekoil Cayman does not hold a majority stake in Lekoil Nigeria. It holds 40 per cent of the issued share capital of Lekoil Nigeria with other Nigerian shareholders holding the remaining 60 per cent.
“Therefore, Lekoil Cayman’s Board, in a hostile takeover attempt, cannot unanimously make rules or dictate terms to Lekoil Nigeria.”
In 2020, Metallon Corporation, a South African firm, took advantage of a drop in Lekoil Cayman stock price to accumulate 15 per cent of its shares in a ploy to take over Lekoil Cayman with the expectation that it would gain control of Lekoil Nigeria. Clearly, Metallon did not do its homework properly. “They apparently did not factor in the agreement relationship between Lekoil Nigeria and Lekoil Cayman,” an industry analyst opined.
“What was Metallon thinking?” an analyst in the sector asked in astonishment.
The Federal Government through the Ministry of Petroleum Resources, in a letter signed by the Minister of State for Petroleum Resources, Timipre Sylva, dated December 30, 2020 and entitled, “The recent shareholder requisitioned extra-ordinary meeting, shareholder purchase activity and implications for asset owning entities in the Nigeria oil and gas,” addressed to the Chief Executive Officer, Lekoil Limited, Cayman Island, said that such significant change of shareholding could only be carried out in close adherence with the guidelines and procedures for obtaining consent to the Assignment of Interest in oil and gas assets dated August 11, 2014, issued pursuant to the power of the Minister of Petroleum Resources under the Petroleum Act.
The minister stated: “Up till now, the Ministry of Petroleum Resources or the Department of Petroleum Resources (DPR) has not been afforded the opportunity to determine the compliance of this transaction with extant guidelines. Articles 3 of the guideline of Ministerial Consent set out the key elements of assignment of ownership and control of interests in oil and gas assets and the requirements for securing Ministerial Consent. We cannot over-emphasise the consequences of non-compliance with Ministerial guidelines,” the minister stated.
It was gathered that up till now, Lekoil Cayman has not deemed it fit to respond to Nigeria’s request. Rather, it is issuing persistent threats to Lekan Akinyanmi.
With an average daily production of 7,800 barrels and prospect of additional 12,400 barrels per day from Otakikpo marginal field in Oil Mining Lease (OML) 11, offshore Nigeria, analysts are of the view that the Federal Government must act and protect Akinyanmi against the injustice being perpetrated by what they described as a “gang of investors” from South Africa to forcefully take over Lekoil Nigeria.
They reasoned that as a major marginal field operator with investment in Ogo in OPL 310 (LEKOIL, 17.14 per cent interest), OPL 276 (LEKOIL, 45 per cent interest) and OPL 325 (LEKOIL, 62 per cent interest), Lekoil Nigeria is one of the examples of successfully run indigenous oil companies.
Lekoil Nigeria was founded by Lekan Akinyanmi in 2010 and when it was listed on the London Stock Exchange in 2013, it was listed as Lekoil Cayman, a separate company founded and registered in the Cayman Island.
However, trouble reared its ugly head in 2020, when Lekoil Cayman’s shares dropped. Metallon, a South African company, mopped up 15 per cent of Lekoil Cayman shares, thereby becoming the majority shareholder in the company. Lekoil Cayman, with Metallon as a major shareholder, felt confident enough to make its next move. It attempted to take over and control Lekoil Nigeria. Consequently, Lekoil Cayman announced the termination of the CEO, the representative of 60 per cent ownership of the company in Nigeria, Lekan Akinyanmi.
It was an obvious and blatant move, a top industry player reasoned.
Nigerian shareholders have insisted that “Lekoil Nigeria is the custodian of oil and gas assets associated with the Lekoil brand and Mr. Akinyanmi remains in charge of the company.”
Sources close to the matter indicate that all the assets, loans, goodwill and agreements that made Lekoil what it is today were acquired under the leadership of Akinyanmi, who founded the company in 2010. The Admission Document with which the company was listed on AIM, which is available on the Lekoil website indicates that Lekoil Cayman does not hold a majority stake in Lekoil Nigeria. It holds 40 per cent of the issued share capital of Lekoil Nigeria while other Nigerian shareholders hold the remaining 60 per cent. Therefore, “Lekoil Cayman’s Board in a hostile takeover attempt cannot unanimously make rules or dictate terms to Lekoil Nigeria.”
Lekoil Cayman hit by massive Board resignations
Metallon’s attempt to take over the company, last week Friday, saw a number of its directors and senior executives resigning from the Board of Lekoil Cayman with immediate effect.
Lekoil Cayman, in a statement, said that Aisha Muhammed-Oyebode, Chair of Lekoil Nigeria, had resigned as a non-executive Director of Lekoil Cayman. CEO of Lekoil Nigeria, Lekan Akinyanmi, has resigned as an executive Director of Lekoil Cayman. Company Secretary of Lekoil Nigeria, Gloria Iroegbunam, has resigned as Company Secretary of Lekoil Cayman.
“All three will remain in their current positions at Lekoil Nigeria.”
Mrs. Muhammed-Oyebode commented: “The Board and management of Lekoil Nigeria remains committed to its vision of developing the company’s assets and we wish to assure our numerous stakeholders, especially our shareholders, partners and colleagues, that the strategic national assets under our purview will be protected by all legitimate means available to us. This in turn will ensure the restoration of value for all shareholders, both in Lekoil Nigeria and Lekoil Cayman.
“The Board of Directors of Lekoil Cayman continues to show a blatant disregard for the Shareholder Agreement, a legally binding agreement which governs the relationship between Lekoil Cayman and Lekoil Nigeria and which was implemented at the time of Lekoil Cayman’s listing to meet the requirements in Nigerian law in respect of control of indigenous strategic assets.
“The continuous breaches of due process and corporate governance by the Board of Lekoil Cayman has left us with no option but to resign collectively from the Board of Lekoil Cayman. Meanwhile, Lekoil Nigeria has separately written to Lekoil Limited’s advisers and to the AIM authorities requesting them to investigate the behaviour of the current Board of Lekoil Limited.”
In April this year, two of the directors, Michael Ajukwu and Mark Simmonds (Non-Executive Directors) resigned their appointments.
Mr. Ajukwu, who had assumed the position of Chairman of Board in January 2021, decided to “step down” from the role and from the Board, from 21 April 2021. Mr. Anthony Hawkins was picked as interim chairman until the appointment of a new chairman by the Board of Directors.
Mr. Simmonds, who had previously noted his intention to stand down from the Board at the company at the company’s Annual General Meeting, decided to bring forward his resignation and “stepped down” on 21 April 2021.
The Shareholders’ Agreement, which existed long before Metallon came on the scene, had protections in place for Lekoil Nigeria and “Lekoil Cayman’s attempts to undermine the Shareholders’ Agreement is just incredible,” another source stated.
Indications are that prior to the Extra-ordinary General Meeting of Lekoil Cayman on January 8, 2021, these issues were clearly stated to Metallon’s representatives, but apparently they omitted this little detail from the shareholders and others whom they conscripted to help with the takeover attempt.
It is confirmed that Lekan Akinyanmi has over 20 years’ experience in the oil and gas industry, most recently with AllianceBernstein L.P. in New York where he spent six years as a research analyst and portfolio manager covering Energy and Materials worldwide.
He has held senior positions at UBS Investment Research, 3Fold Ventures and Encabler Inc, a technology company headquartered in California, specialising in interactive television software, which he founded in June 2000. Lekan is also acknowledged for successfully negotiating and raising the first round of equity capital for Lekoil’s operations.
Many analysts opine that what Metallon is attempting to do with Lekoil is to take ownership of Nigerian assets through the back door. The Nigerian government must take steps to ensure that Lekoil Nigeria and its Nigerian assets are protected from illegal raiding.