Otedola seeks shareholders’ ratification of divestment plans
Majority shareholder of Forte Oil Plc, Femi Otedola, has unveiled plans to buy out the company’s upstream services and power distribution firm immediately the deal is ratified by the shareholders of the company on February 7, 2019.
This is coming few weeks after the oil mogul disclosed his intention to sell-off his 75 per cent direct and indirect holdings in Forte Oil downstream business.
The Company Secretary, Akinleye Olagbende, in a letter to the Nigerian Stock Exchange (NSE) yesterday stated that the move followed shareholders’ approval on May 23, for the divestment of Forte Oil from its Ghana unit AP Oil and Gas and Amperion Power Distribution Company, which holds the group’s interest in Geregu Power Plc.
According to him, the company’s effort to dispose the assets was hit by low interest in the bidding process as well as low price expectations.
“A public tender sale process was commenced to attract interested potential investors to participate in the divestment opportunity.
“Upon review of the outcome of the sale process, the management of the company is of the view that there was an unexpectedly low interest in the bidding process.
” The pricing proposal does not meet its expectation, based on an independent valuation of Amperion, thus , may not be in the best interest of its shareholders,” Olagbende said.
Based on the development, Olugbende said the company’s chairman had expressed interest to participate in the divestment opportunity through his designated vehicle.
According to him, the proposal will be subjected to a rigorous review by the company’s management and if successful must be in line with relevant extant regulatory requirements.
He said that the process if successfully completed would ensure that adequate funding is made available for the company’s downstream operations.
The proceeds of this restructuring exercise would enable the company to compete more favourably and achieve its planned expansion objectives within the downstream subsector.
“This will also reduce our finance cost significantly and increase distributable earnings for the benefit of our shareholders,” he added.
Otedola had recently signalled his intension to sell-off his 75 per cent direct and indirect holdings in Forte Oil downstream business.
He had reached an agreement with Prudent Energy team, investing through Ignite Investments and Commodities Limited, to divest his 75 per cent direct and indirect shareholding in the Company’s downstream business.
It is not clear if the move by the billionaire was part of his original plan to divestment from the downstream business of the company to enable him to take over the lucrative upstream and power asset of the firm but stakeholders in the nation’s capital market have urged the regulators to ensure that the new investors of Forte oil have the competence to turnaround the company within the shortest period.
They argued that the firm’s current debt profile is on the high side, noting that an individual having such huge stake in any firm is detrimental.
They however admitted that the divestment would enable Femi Otedola to focus more on his core business area.
According to them, business is about interests and that interest is what drives an investor to dedicate his time and resources to create values for the business.
Specifically, the Chief Research Officer of Investdata Consulting Consulting Limited, Ambrose Omodion argued that individual holding huge percentage stake in a company is unhealthy.
“In the first place, individual holding such percentage is not healthy for any company. The expertise or background of the buyers will determine the next phase of Forte oil.”
For the Managing Director of Highcap Securities Limited, Imafidon Adonri, FO needs a lot of money to survive.