The South Africa-based Metallon Corporation’s bid to take control of LEKOIL Cayman has suffered a major setback ahead of the Executive General Meeting (EGM) slated for today in Lagos, Nigeria.
A source disclosed that Metallon hopes to alter the representation of the management of Lekoil by allegedly imposing three directors of its choosing in the company’s board today.
Metallon increased its stake in early 2020 to a 15.10% shareholding in Lekoil Cayman. Through the EGM, the company is seeking to stage a takeover bid by attempting to control over 50 per cent of the board.
But, a letter signed by Nigeria’s Minister of State for Petroleum Resources, Chief Timipre Sylva, described the move as illegal.
The Minister stated that, “such significant change of shareholding can 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 11th August 2014, issued pursuant to the Powers of the Honourable Minister of Petroleum Resources under the Petroleum Act. 3,” Sylva said.
“Articles 3 & 4 of the Guidelines of Ministerial Consent sets out the key elements of assignment of ownership and control of interests in Oil and Gas Assets and the requirements for securing Ministerial Consent,” the minister said in response to Metallon’s acquisition of Lekoil shares in order to control its Nigeria based assets.
Sylva observed and cautioned that, “We cannot over-emphasize the consequences of non-compliance with the Ministerial Guidelines,” the letter quoted.
Meanwhile, Lekoil has issued a statement indicating that “in the event that Metallon’s acquisition of its shareholding has not complied with Nigerian legislation and, in the absence of any suitable remedial action, sanctions (which ultimately can include Licence revocation) could be imposed directly on the company by the Ministry of Petroleum Resources.”
The company confirms that it has notified Metallon of this matter and has advised Metallon, as a matter of urgency, to liaise with the Federal Ministry of Petroleum Resources in order to resolve any issues arising from the acquisition of its shareholding.
It further disclosed that while admitting raising cash to develop promising assets has been difficult, and it is a situation consistent with other exploration and production companies “but it could be worse with Metallon taking a lead role on the company’s board.
“As a result of its records, it is doubtful that Metallon has the resources to advance the development of Lekoil’s assets,” argues Lekoil.
The firm, however, noted that it will provide an update on the matter in due course.
