- Â Petitions SEC, seeks to stop companyâ€™s AGM
- Oando: This is an attempt to force us to buyout Volpi
One of the founders and majority shareholder of Intels Nigeria Limited, operator of the oil and gas logistics terminals in Onne, Rivers State and Warri, Delta State, Mr. Gabriele Volpi, has stepped up his battle against the group chief executive officer of Oando Plc, Mr. Wale Tinubu, over control of Oando, citing alleged mismanagement, cooked books and huge debts, THISDAY has learnt.
Accordingly, Ansbury Investments Inc., a firm set up by Volpi, a multi-billionaire who holds dual Italian and Nigerian citizenship, with extensive interests in oil and gas, ports logistic services and real estate spanning 40 years in Nigeria, has written a petition to the Securities and Exchange Commission (SEC) and is seeking to stop Oando from holding its Annual General Meeting (AGM) slated to take place in Uyo, Akwa Ibom State on September 11.
He is also pushing for the removal of Tinubu and his deputy, Mr. Omamafe Boyo, over their inability to repay an $80 million loan, which he lent them.
However, Oando has pushed back on the allegations, with a senior official in the company informing THISDAY that Oandoâ€™s AGM would go ahead as planned and accused Volpi of resorting to blackmail in order to force Tinubu and his deputy to buyout Ansbury.
In 2012, Volpi had through his company, Ansbury, invested about $700 million in Ocean and Oil Development Partners Limited (OODP BVI), a special purpose vehicle registered in the British Virgin Islands, by acquiring a 61.9 per cent stake in the firm, while a company owned by Tinubu, Withmore Limited, held 38.10 per cent of the stake in OODP BVI.
Volpi, who also has extensive business interests in Angola, is alleging that he lent $80 million to Withmore to enable Tinubu, whom he said he trusted at the time, to acquire the 38.10 per cent stake in OODP BVI.
Tinubu had approached Volpi to invest in the British Virgin Islands-registered firm when Oando Plc was seeking to acquire ConocoPhillipsâ€™ upstream oil and gas assets in Nigeria for $1.5 billion, a deal eventually consummated in 2014.
OODP BVI, in turn, owns 99.99 per cent of the shares of Ocean and Oil Development Partners Nigeria Limited (OODP Nigeria), which holds 55.96 per cent of the shares in Oando Plc, the oil and gas company listed on Nigerian and Johannesburg Stock Exchanges.
THISDAY gathered that the grievances of Ansbury, which is now claiming to own 100 per cent of the shares of OODP BVI and 99.99 per cent of OODP Nigeria over Withmoreâ€™s inability to repay the $80 million loan, effectively whittling down Tinubu and Boyoâ€™s interest in Oando Plc to 1.2 per cent, stemmed from the alleged mismanagement of the company by Tinubu and Boyo.
Ansbury, it was also learnt, is said to be alarmed over the alleged â€œhuge financial mismanagement, very high debt and cooked booksâ€ of Oando.
Ansbury is alleging that Oando is in a very bad shape, despite the official financial communications from the company to the contrary.
It was further learnt that Ansbury took the decision to remove the CEO, and sack the entire board and management since March 2017.
Apart from removing Tinubu and sacking the board of directors, Ansbury is also planning to reject any proposal seeking approval for the remuneration of the CEO and other directors of Oando and also reject the approval of the companyâ€™s 2016 annual report at its next AGM.
Speaking on the crisis of confidence between the shareholders, a source in Ansbury said: â€œThe situation is that Withmore never repaid the loan, and Ansbury is struggling to recover the $80 million and the shares of OODP BVI.
â€œSo the reality is that Ansbury controls 100 per cent of OODP BVI, that control the 99.99 per cent of OODP Nigeria, that is the main shareholder of Oando Plc.
â€œAs far as we are concerned, Oando, in which we are the majority shareholder due to our indirect interest in the quoted company, is being mismanaged, its accounts are being cooked, and it has huge liabilities that have eroded the value of the company.â€
To buttress this claim and stop the AGM from going ahead, Ansbury on May 3rd and 4th submitted a petition to SEC in Lagos and Abuja, respectively, in which it drew the attention of the regulator to the alleged state of affairs in Oando and sought its intervention.
THISDAY further gathered that Tinubu is aware of the plan by Ansbury to remove him and was said to have commenced moves to stop his ouster.
Aware that Ansbury is not in a position to take control of OODP Nigeria at the moment, Tinubu was said to have initiated steps to retain his control over Oando.
The Oando CEO was alleged to have quickly called the AGM in order to obtain the approval of the shareholders of the companyâ€™s 2016 annual report, keep himself as CEO of the company, retain the current board of directors who are in his corner and get approval for his remuneration and that of the directors.
Tinubu was also alleged to have approved the notice of the AGM with the minimum notice and slated it to take place in Uyo, which the Ansbury source described as a remote location, in order to keep the latterâ€™s shareholders at bay.
According to a notice of the 40th AGM of Oando, which was signed by its chief compliance officer and company secretary, Ms. Ayotola Jagun, and published on August 15, the AGM will be held in Akwa Ibom State Hall, Uyo on September 11.
THISDAY, however, gathered that in order to checkmate Tinubu, Ansbury has asked SEC to put the AGM on hold to allow Ansbury to take over OODP Nigeria and to avoid a meeting where the major shareholder is not allowed to attend.
In the first petition to SEC, Ansbury alleged serious financial abuse and accused the management of Oando of gross abuse of corporate governance tenets in its running of the company.
The petition was titled â€œSerious Concern to Corporate Governance Existence, Gross Abuse of Corporate Governance and Financial Management in Oando Plc â€“ Request for Urgent Regulatory Intervention.â€
In the petition, Ansbury cited page eight of the companyâ€™s annual report of 2016, alleging that the â€œstrong uncertainty regarding the going concern status of the group had already arisen in 2015 and strengthened in 2016 as clearly pointed out by the auditors in their reportâ€.
The petitioners also alleged that â€œoperational management closed with a consistent loss of over N7.68 billion, significantly worse than 2015â€, arguing further that â€œthe net loss for the year from continuing operations in 2016 amounts to N25.8 billion, adding to the net loss of N34.9 billion of the previous year (2015)â€.
Ansbury also informed SEC that Oandoâ€™s â€œcurrent liabilities as at December 31, 2016, far exceeds the current assets by N263.7 billion, confirming serious financial imbalance from the previous financial yearâ€.
It added: â€œThe profit for the year 2016 (N3.94 billion) only derives from the positive flow generated from the sale of consistent part of the groupâ€™s assets, which was not enough to fully repay outstanding debts and has significantly decreased the possibility of generating future cash flows to repay current liabilities.
â€œThe already severe debt situation of the group highlighted by the management under notes will deteriorate even further if certain potential liabilities became due, such as: (i) the increase in the liabilities deriving from a price adjustment inherent in the sale of downstream business (already valued at N50 billion and in accordance with the counterpart); (ii) pending legal suits against the group (equal to N608.2 billion), have a high possibility to succeed against the company as projected by the management. The total value of suits pending is higher than the current sales of the entire group.
â€œBased on the foregoing, we hereby request that SEC should urgently intervene and adopt all measures deemed appropriate in order to protect the interest of investors, which is one of the principal mandates of SEC, most especially the interest of shareholders of Oando Plc in view of the severe financial situation and imminent disruption of the affairs of the company, which the current management of the company does not seem to be able to cope with.â€
On the allegation of gross abuse of corporate governance tenets levelled against Tinubu and his management team, Ansbury argued that despite the severe financial situation of the company, the management has kept on increasing the remuneration of directors.
â€œThis action and the progressive impoverishment of the group seems directed towards a liquidation of the latter more than restructuring and reorganisation, taking into consideration the fact that both the strategy adopted by the management till now and the projected divestiture are not sufficient to service the existing debt,â€ the petitioners explained.
Ansbury urged SEC to convene an extraordinary general meeting (EGM) urgently to sack the entire board and management so as to save the company from imminent collapse.
In another separate petition dated August 17, 2017, and signed on behalf of Ansbury by Andrea Carollo, the investment firm also urged SEC to postpone Oandoâ€™s AGM, pending the resolution of the shareholding matter.
â€œFurther to our previous letters on the captioned matter, we write to request your urgent assistance in postponing the Oando AGM, pending the resolution of the shareholding matter previously raised. We reiterate the statement made in our previous letters that Ansbury holds 61.90 per cent of the shareholding in OODP BVI, which in turn, holds 99.99 per cent of the shares in OODP Nigeria, which in turn holds approximately 56 per cent of Oando shares.
â€œNotwithstanding this, Ansbury has no visibility of, or input in the management of Oando, or in fact OODP Nigeria,â€ Ansbury explained in the second petition.
In response to Ansburyâ€™s petitions, SEC constituted a task force and invited the representatives of Ansbury to give reasons why SEC should intervene and stop the AGM.
THISDAY obtained the minutes of the 10-man task force, which had Mr. Charles Udorah as its chairman.
Others who sat on the task force included Nasiru Muhammed, Abubakar Ambursa, Tafa Maikyau, Mr. Rotimi, Bisi Makojuola, Mr. Somibi, Mr. Silvano Bellinato, Mr. Mike Epelle, Mrs. Joke Aliu, and Mr. Cephas Caleb.
According to the minutes, the task force met at the fourth-floor meeting room of SEC Towers in Abuja on August 30, 2017, and after deliberations, it came up with what it called â€œpossible steps to be taken going forwardâ€.
One of the three steps it suggested was that Ansbury should write a letter to Oando in response to the notice of the meeting stating that there is no valid representation for OODP Nigeria.
The task force also suggested that â€œAnsbury should file an action in court for an order postponing the AGM, or in the alternative, for an order of injunction restraining Oando Plc from entertaining any representation from OODP Nigeria during the AGMâ€.
The task force also advised Ansbury to prepare a detailed written submission stating the grounds upon which SEC should postpone the AGM.
â€œAnsburyâ€™s request to postpone the meeting will effectively constitute SEC into a court of law. The proper thing for Ansbury to do is to seek legal redress in a court of law. Further, Ansbury has other causes of action against Withmore.
â€œFor example, even the â€˜police reportâ€™ attached to the letter written to Ansbury and signed by Wale Tinubu and Omomafe Boyo was not a police report but a mere letter written by a private company and signed by a retired DSP.
â€œThis is clearly false information that can be successfully challenged in court,â€ the task force said.
The task force further held that the company (Oando) is a going concern and SEC could always intervene to reverse decisions that were not properly arrived at the AGM when it concludes its investigation.
â€œSuspending the AGM is not likely to resolve or aid the resolution of the issues raised in the resolution. Where the AGM holds, will not affect SECâ€™s powers to subsequently deal with the issues raised in the petition as it deems fit,â€ the task force concluded.
However, THISDAY gathered that the outcome of the meeting did not go down well with Ansbury, as SEC was said to have preferred to continue its investigation.
â€œThe truth is that the postponement of the AGM is a matter of public interest. It is true that if SEC does not postpone the AGM, it will encourage a general meeting where, from one side, the minority shareholders will not be in a position to vote properly, as they do not have the privilege of the full facts of the affairs of the company â€“ facts that are well known to SEC.
â€œAlso, the major shareholder will be deprived of the opportunity to participate and vote at the AGM. SEC is fully aware of the situation and this is clearly against the fair functioning of the stock market,â€ explained the Ansbury source.
The source wondered why SEC would allow such market infractions to go on unheeded when Tinubu only controls 1.2 per cent of the shares of Oando due to Withmoreâ€™s indebtedness to Ansbury.
â€œThis has a major negative impact on the credibility of the functioning of the financial markets in Nigeria. A foreign investor invested nearly $1 billion in Oando and this is the situation.
â€œWho else will invest in Nigeria from abroad if there is no support from the market regulator and the authorities?â€ the source queried.
In response to Ansburyâ€™s petitions to SEC, Oando had acknowledged in a published statement that two petitions were filed with SEC alleging gross abuse of corporate governance and financial mismanagement.
Oando has however argued that the petitions had no merit, as the issues raised had received approval from the board, shareholders and even SEC, where required.
The company also stated that the other matters highlighted by the petitioners could have been directed to the company for necessary clarification.
Oando also noted that Ansbury, â€œthe petitioner is not a shareholder of the company, but a shareholder in a company domiciled in a jurisdiction outside Nigeria which in turn holds shares in a Nigerian investment company that is a shareholder in Oandoâ€.
The company added that it has availed SEC with all documents requested, adding that as a public company listed on both the Nigerian and Johannesburg Stock Exchanges, it would provide full disclosure of the outcome as soon as the SEC inquiry is completed.
Also, a senior executive of Oando who preferred not to be named, dismissed the allegations made by Ansbury against Tinubu and other directors of the firm, stressing that its investment was in a foreign firm, OODP BVI, and the dispute between it and Withmore had gone to arbitration for a resolution of the dispute.
He also dismissed the allegations of financial mismanagement and doctoring of Oandoâ€™s books, stating that a representative of Ansbury, Mr. Francesco Cuzzocrea, had sat on the Oando board from July 25, 2013, to February 19, 2016, and had approved the companyâ€™s account for 2015 and never raised any objections.
He added that Ansburyâ€™s $80 million loan, by the loan agreement, was not due for repayment.
â€œAll this is arising because Ansbury is under financial strain and wants us to buy them out. But doing so at this time would be injurious to Oando because it has other obligations,â€ he said.
Opening up on Oandoâ€™s indebtedness, the company source said the company borrowed $900 million from the banks to acquire the oil and gas assets of ConocoPhillips, of which $600 million had been repaid to the lenders.
â€œIn addition to the reduction of the loans associated with the ConocoPhillips acquisition, we have reduced our total indebtedness to the banks from $2.5 billion to $600 million in two and a half years.
â€œWe have been open about our loans and repayments and out statements were approved by Ansburyâ€™s representative on the board, Francesco Cuzzocrea.
â€œSo all this is an attempt to rubbish and blackmail Oando to buyout Ansburyâ€™s shareholders because they are under financial pressure.
â€œBut this company (Oando) has assets worth $3.5 billion and our ConocoPhillips fields are now producing about 40,000 barrels of crude oil per day. So it will be ridiculous for Ansburyâ€™s shareholders to expect us to strip our assets just because they want out.
â€œBesides, the dispute among the OODP BVI shareholders is currently in arbitration, so we would rather see that run its course than engage in a war with Ansbury.
â€œWe are also aware of the attempt to push Wale Tinubu, Mofe Boye and other directors out, but this will not succeed. And we intend to go ahead with the AGM as planned,â€ the Oando official said.