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Shareholders  divided as Oando’s crisis  escalates

By OKEY ONYENWEAKU

Wale Tinubu, MD, Oando Plc

Shareholders of local oil marketing consortium, Oando Plc, have been struck by a double dose of trouble. The first signs of a snag started with minority shareholders kicking against the alleged mismanagement of the company by its board, following repeated and growing loses posted by the company over the last three years.

The second indication that the company was heading for more difficult times happened last week when the Nigerian Securities and Exchange Commission (SEC) ordered the Nigerian Stock Exchange (NSE) to place the company’s shares on a 48 hour full suspension to be followed by a technical suspension this week.

SEC’s intervention in Oando’s management affairs resulted from sustained and vociferous protests of minority stakeholders in the company who accused the company’s top managers of reckless endangerment of the company’s health through what they claimed was the managements incompetence, lack of prudence and outright recklessness.

Shareholders pointed at management’s lack of transparency and focus as a major reason for the company’s failing fortunes. Trading in the shares of the company has been suspended on both the Nigerian Stock Exchange (NSE) and the Johannesburg Stock Exchange (JSE). The implication of the suspension on both exchanges is that there will be no trading on the stock and its price cannot change over the suspension period.

Analysts explain that ‘suspended trading’ is a stop in the trading of a security for an extended period of time that normally occurs when there is a lack of material financial information on the security. They added that once the security is suspended, shares of that security cannot be traded on the market until the suspension is lifted or lapses. The exact amount of time for the suspension will be determined on a case-by-case basis.

According to the analysts, the SEC has the authority to suspend the trading of a security for up to 10 trading days to protect investors.

“Effective for forty-eight (48) hours from today (Wednesday), 18 October 2017 to 20 October 2017,The Nigerian Stock Exchange should implement a full suspension in the trading of the shares of Oando Plc,” SEC said on Wednesday last week in a circular made available to the press.

The circular continued, “Effective from 20 October 2017 and until further directive, The Exchange should implement a technical suspension in the shares of Oando Plc.”

Similarly the South African, JSE also reacted, “The company has received communication from its primary listing, the Nigerian Stock Exchange, that the Securities and Exchange Commission has issued a directive to immediately suspend the trading of Oando shares, a directive to which the NSE has complied.

“The JSE has accordingly suspended trading of the Oando shares with effect from 09:00am SA time, pending clarification following the review of subsequent correspondence received on October 18, 2017 from the NSE and SEC and will provide a full statement of the company’s position as soon as possible,” the South African-based Exchange was quoted to have said.

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Minority shareholders are divided on the crisis of the company.

Former National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu, expressed discomfort at the dimension the crisis in Oando Plc has taken noting that it might hurt minority shareholders. He advised caution so that the value of the company does become destroyed.

Muktar Muktar, a shareholder of Oando Plc told Business Hallmark that what bothers most of them is that the management has stripped the company of valuable assets and left with almost nothing to fall back on.

Muktar explained that the management of Wale Tinubu, Group Managing Director of Oando Plc has been at the helms for more than 17 years and is still running the company.

According to him, we are happy that the regulators have come in and have appointed forensic auditors that will eventually uncover their fraudulent activities over the years.

”The current management has stripped the company of all its valuable assets. Yet they want to remain there after over 17 years, to do what? The liabilities out- weigh its assets today by over N200billion. How did that happen? We want to know. I advise that SEC should give us a caretaker management for now,” Muktar said.

Oando, problems did not start recently, the company had posted profit after tax of N14.3billion in 2010, it 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 in 2013 from where it slipped into the red at N145billion in 2014 and levelled up at a loss of -49.6billion in 2015 and profit after tax of N3.4billion in 2016.

A shareholder of the Company, Mr Okezie Boniface told Business Hallmark in a telephone interview that though management crisis does not augur well for companies whether large or small, he hopes that the issues will be resolved equitably.

Another shareholder Timothy Adesiyan fears that the ongoing management crisis in Oando may trigger heavier problems for the company which has existed for years and have many shareholders.

He explained that the weak economy in addition to the Acquisition of Conocophilips it did a few years back as the problem it is still struggling to solve today.

”We are hoping that the crisis does not lead to the failure of the company even though we approve of the on-going investigations”, said Adesiyan.

The company has been embroiled in crisis since its last shareholders meeting with some calling for the sack of its management.

Controversy had started when major shareholders Ansbury and Manga petitioned the SEC, the Securities and Exchange Commission, alleging gross abuse of corporate governance standards and financial reckless fiscal management. They had subsequently called for the removal of the management of the company and removal of all board members.

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Mangu, BH investigation reveals owns about 17.9 per cent share of the company, had expressed discomfort over the 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 a result.

“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.

The auditor to Oando Plc, Ernest & Young had also faulted some aspect the 2016 financial statement of the company, even as shareholders expressed mixed feelings on the company’s performance.

According to the auditors, “We drowning attention to note 45 in the financial statements, which indicates that the company reported a comprehensive loss for the year of N33.9 billion ( 2015: loss N56.6 billion) and as at that date, it’s current assets exceeded current liabilities by N14.6 billion (2015: N32.8 billion net current liability). The group recorded a comprehensive income of N112.4 billion for the year ended December 31, 2016 (2015: loss N37.8 billion) and as at that date, it’s current liability exceeded current assets by N263.8 billion (2015: N260.4 billion). As stated in the notes, these conditions, along with other matters, indicate that a material uncertainty exist that may cast significant doubt on the company (and Group’s) ability to continue as a going concern.”

Meanwhile, Nigeria’s marquee indigenous oil company is slowly crawling back to its feet after two years of disastrous operational performance. Emerging from a loss of N26.9 billion the previous year, the company posted a strong 26% increase in turnover from N212.3billion in H1 2016 to N267.1 billion in H1 2017. With the development Oando has supported investor optimism.

In the course of business, gross profit rose 76 per cent from N19 billion in 2016 to N33.4billion in 2017.

Indeed, the game changer for Nigeria’s leading indigenous energy group came from its thumping profit after tax which leaped 117 per cent from a loss of N26.9billion in 2016 to a profit of N4.6billion in 2017.

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