The chain of events that led to Oando’s decision to delist
Key highlights
Oando will delist from the Nigeria Exchange (NGX) subject to the approval of its shareholders at the company’s court-ordered meeting, as well as the sanction of the Federal High Court.
Oando’s decision to delist is a culmination of several legal battles over the years which pitched the company’s management against some of its minority shareholders.
As a privately held company, management can focus on long-term objectives and invest in initiatives that may take longer to generate returns, without being subject to the short-term pressures of public markets.
In a press release dated March 30, 2023, one of Nigeria’s most notable oil and gas companies, Oando Plc, announced it has decided to delist from the Exchange.
By delisting, the company will go private and no longer be a publicly quoted company.
Its core shareholders Ocean and Oil Development Partners Ltd will acquire the shares of all minority shareholders in Oando.
According to the press release, the company had applied for the SEC’s ‘No Objection’ to the Scheme, which is subject to the approval of the shareholders of Oando at the Court-Ordered Meeting of the Company, as well as the sanction of the Federal High Court.
If the conditions of the Transaction are satisfied and the same is sanctioned by the Federal High Court, the Company will be delisted from NGX and JSE and re-registered as a private company.
This ends a new 20-year journey as a publicly listed company operating in both the downstream and upstream of the Nigerian oil and gas industry.
For thousands of shareholders of the company, the decision to delist could be viewed as bittersweet considering several years of courtroom battles, operational headwinds, and a largely turbulent oil and gas sector.
How did we get here?
The story of Oando’s decision to delist is a culmination of several legal battles over the years which pitched the company’s management with some of its minority shareholders.
Nairametrics published a corporate story that explained the series of events that led to the shareholder debacle.
Oando’s travails over the years can be traced back to its decision to acquire upstream IOC, ConocoPhillips for $1.5 billion in 2014. At the time oil prices were at all-time highs and the Nigerian economy was booming.
But soon after the acquisition, the global economy went south beginning a series of events that led to shareholder squabbles, operational restructuring of the company, change of auditors, delays and eventual reporting of massive losses, a revival in profitability, acquisitions, and the bold but inevitable decision to delist.
The matter at one point caught the attention of the National Assembly, forcing them to wade into the matter between the company and the former DG of SEC Mallam Mounir Gwarzo, who lost his job in the wake of the controversy.
Events leading to the decision to delist
Speaking specifically to the company’s delisting we look back to 2021 to examine events that triggered the decision to exit the Exchange.
In March 2021, a Federal Court in Lagos oversaw a petition by minority shareholders of Oando requesting that the Court orders the buyout of their entire shareholding either by OODP or Oando, as the Petitioners believe that this would be in their best interest as well as that of the Company.
In response, Oando filed across-petition, stating its willingness to buy out all the minority shareholders of Oando via a court-ordered Scheme of Arrangement.
Following its AGM held in August 2021, the company issued a press release stating that its shareholders had approved that it enters a settlement with the Securities and Exchange Commission about the investigations, findings, dispute, and settlement arising from and relating to petitions brought by Ansbury Inc one of its minority shareholders and Alhaji Dahiru Mangal.
Subsequently, in November 2021, Oando informed the Exchange that it had reached an agreement to acquire Alhaji Dahiru Mangal’s interest of 1,968,452,614, shares in Oando PLC by Leaf Investment & Realtors Limited.
The acquisition gave Leaf Investments about 15.83% ownership of Oando Plc.
By December 2021, the company announced changes to the board of directors of the company. The company appointed the chairman of NDIC, Mrs Ronke Sokefun, and Mrs Nana Fatima Mede as Independent Non-Executive Directors effective December 23, 2021.
While all this was taking place, the company had still not released its audited results for 2019, 2020, and 2021.
It explained that the reason for its inability to release its results was that it was unable to appoint external auditors, due to the indefinite suspension of the Company’s 2018 Annual General Meeting (AGM) by the Securities and Exchange Commission on June 10, 2019.
In February 2022, the company announced the appointment of Mr Adeola Ogunsemi as an Executive Director and the Group’s Chief Financial Officer.
This follows the resignation of erstwhile Mr Olufemi Adeyemo, the Group Chief Financial Officer of the Company.
By June 2022, the Federal High Court ruled on the petitions granting an order that Oando had 30 days30 days to prepare a Scheme Document for the purchase of all the minority shareholders’ shares in Oando Plc for submission to the Securities and Exchange Commission (SEC) and/or the Nigerian Exchange Limited (NGX).
At the time, OODP had a shareholding of 57.37% in Oando PLC, and the above-mentioned minority shareholders had a 42.63% shareholding.
Based on the petition and the subsequent court order, the decision to buy out the minority shareholders resulted in a voluntary delisting of the Company’s shareholding on the NGX.
During the same month of June, the company subsequently released its interim results for the year ended in 2020 and 2019.
It reported a loss after tax of N132.5 billion wiping out its total equity. At the end of the year, its net equity was a negative N169.4 billion.
In August 2022, Oando announced it had replaced Ernst & Young (EY) with BDO Professional Services.
On October 18, 2022, the company informed the Nigeria Exchange that the Federal High Court had extended the timeline given to the company to acquire the shares of the minority shareholders of the company by 90 days.
On March 28, 2023, Oando Plc finally released its 2020 full-year audited accounts which showed a drop in revenues to N477 billion compared to N577 billion (FYE 2019). Loss-After-Tax of N141 billion compared to Loss-After-Tax of N207 billion (FYE 2019).
The company Group MD/CEO Wale Tinubu blamed the result on the global pandemic which he said had a profound impact on the entire oil and gas industry, leading to a sharp decline in energy demand and consequently, lower oil prices.
It said that as a result, the company took on impairment charges on its assets. It also stated that the second tranche funding of the settlement of its “disruptive shareholder issue” resulted in them taking a further impairment on a category of their financial assets.
However, Oando also claimed it had taken a strategic decision to diversify its operations into the renewable energy space towards investing in climate-friendly and bankable energy solutions across Nigeria.
It maintained that the foray into clean energy will provide a hedge against the volatility of the oil and gas market, and position the company for the energy transition, as well as long-term growth.
2021 results came down worse than 2020. It reported a 51% increase in revenues to N722.5 billion compared to N477.1 billion (FYE 2020). Its Profit-After-Tax was N34.7 billion compared to Loss-After-Tax of N140.7 billion (FYE 2020).
On March 30th, 2023, Oando finally announced to the public that in line with the Scheme of Arrangement, it has received an offer from its core shareholder – Ocean and Oil Development Partners Limited (“OODP”) to acquire the shares of all minority shareholders in Oando.
Under the Scheme, each Scheme Shareholder shall be entitled to receive the sum of N7.07 in cash or its equivalent in South African Rand (ZAR) for every ordinary share held by the qualified Scheme Shareholders at the Effective Date of the Scheme. Oando is also listed on the Johannesburg Stock Exchange.
According to the terms of the deal, the N7.07 to be paid to each shareholder represents a 58% premium to the last traded share price of Oando on 28 March 2023, the day before the date of submission of the Scheme applies to the Securities and Exchange Commission.
It is instructive to note that as of June 1, 2014, just before the announcement of the conclusion ConocoPhillips deal, Oando traded for as high as N36 per share,
When do they finally delist?
According to the company, the delisting will only happen if the conditions of the Transaction are satisfied and the same is sanctioned by the Federal High Court.
It also stated that it has applied for the SEC’s ‘No Objection’ to the Scheme, stating that the effectiveness of the Scheme is subject to the approval of the shareholders of Oando at the Court-Ordered Meeting of the Company, as well as the sanction of the Federal High Court.
It is only when this process is over that Oando can be said to have been delisted.
Optics
The advantage of going private for Oando in this story is that it will no longer have to deal with the regulatory requirements and scrutiny that come with being a publicly listed company.
This will also allow the company to focus on its operations without having to worry about the interests of minority shareholders and the associated legal battles.
Additionally, the company’s core shareholders, Ocean and Oil Development Partners Ltd, will be able to acquire the shares of all minority shareholders in Oando and have greater control over the company’s operations.
Finally, going private will allow the company to make strategic decisions without the pressure of short-term financial performance that often comes with being publicly traded.
For shareholders of Oando, the decision to delist from the Nigerian Exchange and go private means that their shares will no longer be publicly traded.
This means that they will no longer be able to buy or sell their shares on the stock market. Instead, the company’s core shareholders, Ocean and Oil Development Partners Ltd, will acquire the shares of all minority shareholders in Oando.
While the decision to delist may be viewed as bittersweet for shareholders who have been with the company for several years, the premium offered for their shares represents a good opportunity to realize a return on their investment.
Additionally, going private will allow the company to focus on its operations without having to worry about the interests of minority shareholders and the associated legal battles, which could ultimately benefit the company in the long run.
Related
Full Story: https://nairametrics.com/2023/04/18/the-chain-of-events-that-led-to-oandos-decision-to-delist/
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