Lekoil has accused minority shareholder Metallon of attempting to seize control of the Nigerian minnow, ahead of the EGM planned for January 8.
Metallon’s demands for change at Lekoil’s board has disrupted its operations, the company said. Lekoil’s nominated adviser (Nomad) resigned on November 20. The company is in talks for a new Nomad but must appoint one by December 23 or its trading on London’s AIM will be cancelled, it said.
The Zimbabwean gold miner’s efforts have disrupted talks with a new Nomad “materially increasing the risk of cancellation”.
Metallon acquired a 15.1% stake in Lekoil from June to August this year. The gold miner issued a statement earlier in December saying it was not trying to seek control of Lekoil. Rather, it said, the Nigerian company’s assets are undervalued and that the best way to improve this would be to change the board.
The miner has proposed the appointment of two new independent non-executive directors, Michael Ajukwu and George Maxwell, in addition to Thomas Richardson, who would represent Metallon.
Metallon’s plan has gone down badly with Lekoil. The board of the Nigerian company said the suggestion was “an ill-disguised attempt by a new shareholder, Metallon, to gain control of [Lekoil] without paying a price to all shareholders that reflects the intrinsic value of the business and assets of the company”.
Lekoil also questioned whether Ajukwu could really be considered to be independent. The Nigerian company said it believed the executive to be “a close friend of Mr Mzi Khumalo, chairman of Metallon”.
Not all of Lekoil’s board agreed, though, with Anthony Hawkins taking a contrary view.
Metallon is facing difficulties in Zimbabwe, Lekoil said. Some creditors have filed winding-up petitions and it has had to sell off most of its mining interests.
The Zimbabwean miner had a number of complaints about Lekoil. These include that its market capitalisation has fallen 87% since listing, that it had missed targets and that the board had failed in the fake loan scandal of January.
Lekoil disagreed, blaming the wide industry malaise and maintaining that it had brought in more robust controls.
Should Lekoil be delisted, shareholders would continue to own the company, but liquidity would dry up. The company may return to AIM, probably after the EGM. In the meantime, Lekoil’s reporting requirements would be reduced.
Meanwhile, Lekoil continues to face financing pressure for its operations in Nigeria.