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Published On: Mon, Jul 23rd, 2018

Shareholders bemoan Oando’s deepening crises

–as court orders top executives to pay N245 billion

By OKEY ONYENWEAKU

It seems the woes of oil producing and marketing company, Oando Plc, will never end. Just smarting from the problems and controversy that almost brought the firm to its knees over book cooking, another more pernicious headache is breaking out; this time court order to pay N245 billion.

Oando

Consequently, shareholders of Oando are beginning to fret and bemoan their fate in the company which they fear has brought them nothing but trouble in recent times and may be sliding into a messier situation.The firm’s owners are all wearing sour faces again, and appear to be saying ‘No-o, not again’.

For the giant oil firm, it is one-week-one trouble’. This time around Oando is supposed to cough out a whopping $680million (N244.8bn) to pay Ansbury Investments, owned by Mr. Gabriel Volpi. Many stakeholders of the company who wish they could wake up from a dream and hear it is not true are all shocked that it is reality.

According to the story, a London Court of International Arbitration (LCIA) ordered two companies owned by the Chief Executive Officer of Oando Plc, Mr. Wale Tinubu and his deputy, Mr. Mofe Boyo, to pay US$680 million (N244.8 billion).

The ruling of July 6, 2018 by the LCIA held that Ocean and Oil Development Partners (OODP), British Virgin Islands, which owns 55.96 per cent of Oando Plc through a holding company, Ocean and Oil Development Partners (OODP) Nigeria Limited, owe Ansbury Investments Incorporated US$600 million (N216 billion).

Ansbury Investment counsel Mr. Andrea Moja who confirmed the LCIA award in a statement to the media said the Arbitration Courtalso held that Whitmore Asset Management Limited, whose ultimate beneficial owners are Tinubu and Boyo, was also owing Ansbury Investment US$80 million (N28.8 billion).

The cumulative debt owed by the Oando top executives to Ansbury totals US$680 million. The development has elicited debate in many corporate offices, while most of the discussions in Marina and Broad streets are centred on how the deals affect shareholders of Oando.

The management of Oando had invited Ansbury and Mangu to take part in funding the acquisition ofConocoPhillips which market observers believe was what did the company in. However, Oando Plc has been making frantic effort to allay the fears of investors in the company, saying it is not affected by the July 6, 2018 verdict of the London Court decision in favour of Ansbury Investments Inc.

Explaining in a statement, Oando said the dispute that brought about the $680m award was between its Group Chief Executive, Wale Tinubu, and Deputy Group Chief Executive, Omamofe Boyo, on the one hand, and Volpi’s Ansbury Investments Inc. on the other hand.

Oando down played the matter, urging the public to disregard what it called a misrepresentation in the media that the LCIA awarded $680m against it.

Discerning shareholders are examining Oando’ statement that the awarded sum to Ansbury only concerns Mr. Wale Tinubu and Omamofe Boyo who are top executives in the company. But analysts say that Oando could possibly not be affected if the top executives can pay the whopping sum without recourse to the oil giant. Nevertheless, the caveat is how and where these executives who own about 60 per cent of Oando can raise N244.8billion to offset their debt.

Selling down their stake in Oando Plc to pay N244.8billion to Gabriel Volpi, the owner of Ansbury, analysts said may be one of options before the two executives. At this point, some experts agree it might not affect the company negatively nor retail shareholders, except owner ship structure is altered. But if otherwise, there will be a big challenge in the hands of shareholders of Oando Plc.

Mr. Okezie Boniface, a shareholder in Oando Plc who had hoped to hit the Bulls eye with the shares of the company he bought at N10.00 per share recently, feels disappointed about the whole issue.

‘’If you read through the whole literature carefully you will see that Wale Tinubu and Boyo’s companies are not subsidiaries of Oando. But by virtue of their positions in Oando and the huge debt on their necks, through their private firms, we are uncomfortable. Though, through the company’s statement shareholders have been made to understand that Oando has no relationship with those companies indebted to Ansbury, but they must explain to us how they intend to handle the matter and exclude Oando Plc’’ said Mr. Boniface.

A senior broker who pleaded anonymity told BH that Oando was just being diplomatic about the setback, insisting the company would suffer as a result of the N244.8 billion liability.

However, the controversy had started when major shareholders Ansbury and Manga petitioned the apex regulator, the Securities and Exchange Commission alleging gross abuse of corporate governance and financial mismanagement. In addition, Ansbury had also informed SEC that Oando’s “current liabilities as at December 31, 2016, far exceeds the current assets by N263.7 billion, confirming serious financial imbalance from the previous financial year”.

They had therefore called for the removal of the management team and sack all board members.

Mangu, BH investigation revealed owns about 17.9 per cent share of the company, and had expressed discomfort over managements handling of the ConocoPhillips transaction.  Ansbury, had accused the management of the company of lack of capacity, efficiency and effectiveness in the running of the firm, believing that Oando’s future was uncertain as aresult.

“Strong uncertainty regarding the going concern of the group (Oando) had already arisen in 2015 and strengthened in 2016 as pointed out by the auditors in their report.” Anbusry had petitioned

“In the previous financial statement, the management had proceeded to liquidate part of the assets of the company and many are going to be liquidated, and in particular, under the notes to the account, management intends to sell its participation in OER (the last asset attributable to the company) in the name of restructuring or re-establishing the group’s going concern,” Ansbury added.

Meanwhile, the company recorded revenue of N497 billion for the year ended December 2017 compared to N455 billion reported for the year ended December 2016. The Group’s profit after tax for the year ended December 2017 was N19.7 billion up 405% compared to N3.9 billion recorded a year earlier.

Oando, however did not start showing signs of weakness today, the company had posted profit after tax of N14.3billion in 2010, which dropped by 81 per cent to N2.6billion in 2011 and rose by 153 per cent to N6.6billion in 2012. Its profit also dropped by 80 per cent to N1.3b from where it fell to N183 million.

Similarly, the company’s basic earnings per share have also been mixed. For instance, it stood at 1,132kobo in 2010 and fell to 829 kobo in 2011, 126 kobo in 2012, 23kobo from where it fell into the red or negative of–(2,076) in 2014. It paid dividend of 300 kobo in 2010, 300kobo in 2011, 239kobo in 2012, 30 kobo in 2013 and non in 2014.

As understandable as it may be for Oando to hinge its problems on impairments which emanated from evaluation of its assets and revaluation, there are fears that the company is in deeper mess than outsiders can fathom.

Before making its strategic acquisitions of ConocoPhillips and Medal Oil within one year and raising hopes of investors, it had in 2007 acquired two oil drilling rigs and emerged Nigeria’s first indigenous oil company with interest in producing deep water assets through acquisition of equity in two oil blocks and five swamp rigs. The company also launched its first independent power plant for the Lagos water corporation.

‘’In 2011, Oando Gas and Power commissioned 128 km EHGC Pipeline, the pipeline was built under a joint venture arrangement with the Nigerian Gas Company (NGC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC)].

The gas infrastructure has the capacity to deliver up to 100million standard cubic feet per day (mmscf/d) of natural gas and will deliver an initial 22mmscf/d of gas to its maiden customer, United Cement Company (UNICEM), to fuel its new 2.5million metric tonnes per annum cement plant, located in Mfamosing, Akampka Local Government Area of Cross River State’’, said WIKIPEDIA.

These rare achievements in Nigeria ignited the interest of many investors who scrambled for the company’s rights issue which were fully subscribed when it raised N55b in 2012 and N48billion in 2014. But this edge has not reflected on the company’s performance as it has been tagged one of the worse performing companies on the Nigerian Stock Exchange.

Investors are not particularly impressed with Oando’s shares price at N5.55 per share as at last Friday.

 

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