TIDMLEK
RNS Number : 6496T
Lekoil Limited
25 July 2022
25 July 2022
Lekoil Limited
("Lekoil" or "the Company")
Interim Results
LEKOIL Limited ("Lekoil" or the "Company") (AQSE: LEK), the
Cayman Islands litigation asset company with an investment in oil
& gas assets in Nigeria, is pleased to announce its unaudited
interim results (the "Interim Results") for the six months ended 30
June 2022 (the "Reporting Period").
PRINCIPAL ACTIVITY, FINANCIAL REVIEW, ASSET SUMMARY, AND
OPERATIONS REPORT
PRINCIPAL ACTIVITY
The Company is an exempted limited liability company
incorporated and registered in the Cayman Islands on 3 December
2010.
The Company is an AQSE listed litigation company, seeking to
recover its equity and "inter-company" debt investments via
litigation or negotiated settlement made in its 40% subsidiary (90%
economic entitlement), Lekoil Nigeria Limited ("Lekoil Nigeria"), a
Nigerian company, and a loan made to Mr. Lekan Akinyanmi ("Mr.
Akinyanmi"), in his capacity as the former CEO of the Company (the
"CEO Loan").
FINANCIAL REVIEW
Financial overview and performance
The Company reported a profit of $836,000 for the six month
period ended 30 June 2022. However, this was largely due to the
application of interest against the intercompany receivable owed by
Lekoil Nigeria and the CEO Loan. Operational costs were $944,000
almost entirely due to professional and legal fees incurred as the
Company continues to restructure.
Net assets of the Company at the end of the Reporting Period
were $136 million. Cash balances as at the end of the Reporting
Period were $547,000.
In and during 2021, the Company commenced a formal review of the
various intercompany and related party loan positions (noting that
Lekoil Nigeria may no longer qualify as a related party and that
the term "intercompany loans" refers to their historic
characterisation). As set out in the annual report and financial
statements for the year ended 31 December 2021 (the "2021 Financial
Statements") , the Company impaired four of the intercompany loans
(as set out in the table below).
Debtor Amount Amount due Amount Reason for
due to the to the Company due to the impairment or
Company as at 30 Company amendment
as at 30 June as at 31December
June 2022 2021 2021
(unaudited) (unaudited) (audited)
Lekoil Nigeria USD $50.9 USD $41.6 USD $49.3 Not applicable
- across two million million million
loans due by
January 2026
and February
2029
------------- --------------- ------------------ -----------------------
Lekoil Oil USD $12.9 USD $19.8 USD $12.9 Reflecting repayments
& Gas Investments million million million and/or the likelihood
by February of recoverability
2024 (i.e. given the likely
Otakikpo) need to litigate
to recover the
sums due
------------- --------------- ------------------ -----------------------
Mayfair Assets USD $1.0 USD $253 USD $1.0 Reflecting Option
& Trust Limited million million million Agreement with
by May 2023 Savannah
(i.e., OPL
310)
------------- --------------- ------------------ -----------------------
Ashbert Oil USD $38.5 USD $35.5 USD $38.5 Not applicable
& Gas Limited million million million
by September
2022 (i.e.,
OPL 325)
------------- --------------- ------------------ -----------------------
As previously stated by the Company, it is aware that Lekoil
Nigeria is unlikely to agree on the exact intercompany debt
position, and the Company emphasises that it expects it will have
to commence litigation to recover the intercompany loans, and that
the recovery of the intercompany loan amounts cannot be guaranteed
to be successful either due to a failure to win the relevant
litigation and/or an ability to effectively enforce a judgment.
As stated above, the Company attributes minimal value to the
day-to-day operational activities of Lekoil Nigeria and, as such
has impaired its valuation of the equity investment in Lekoil
Nigeria to nil value.
ASSET SUMMARY
The Company's asset base now primarily consists of its 40%
non-controlling shareholding in Lekoil Nigeria, various
"intercompany" receivables, the amount owing to the Company under
the CEO Loan and its rights under the Option Agreement (as defined
below).
Portfolio Companies
As at 30 June 2022, the Company held an interest in the
following companies:
-- Lekoil Nigeria Limited (40% legal interest, 90% economic
interest) is a Nigeria incorporated oil and gas exploration and
production company with a focus on Nigeria and West Africa. The
relationship between the Company and Lekoil Nigeria is governed by
a shareholders agreement between the Company and Lekoil Nigeria
dated 13 May 2013 (the "Shareholders Agreement"). The remaining 60
per cent. is split between three other shareholders, the Company's
former CEO, Mr. Akinyanmi (33.33 per cent.), an employee benefit
trust (20.66 per cent.) and a directors' share trust (6 per cent.).
Under the terms of the Shareholders Agreement, the Company has the
right, amongst others, to (i) receive 90 per cent. of any dividend
declared or of any capital returned to members by Lekoil Nigeria,
(ii) appoint three directors to the board of Lekoil Nigeria, one of
whom shall also be an independent non-executive director of the
Company, and (iii) nominate the Chief Financial Officer of Lekoil
Nigeria.
-- Lekoil Management Corp (100%) is a Delaware incorporated
company that provides intra group banking services to the Company
but with no material activities.
-- Lekoil Management Services Ltd (100%) is a Cayman Island
incorporated company with no material activities.
-- Lekoil 310 Ltd (100%) is a Cayman Island incorporated company
with no material activities.
-- Princeton Assets and Trust Pte Limited (100%) is a Singapore
Island incorporated company with no material activities.
-- Lekoil Exploration and Production (Pty) Limited (80%
interest) is a Namibia company with no material activities.
As announced on 10 June 2021, the Company was aware that:
-- in late 2020 Mr. Akinyanmi, without the prior knowledge or
consent of the Company, entered into an employment contract with
Lekoil Nigeria to act as its Chief Executive Officer, with effect
from 1 January 2021. The Company was advised that this represents a
conflict of interest and is a breach of his employment contract
with the Company. This was one of the reasons for the termination
of Mr. Akinyanmi's employment contract with the Company.
-- Lekoil Nigeria stated that Mr. Akinyanmi remains the CEO of
Lekoil Nigeria.
-- No changes had been made to the Shareholders Agreement.
As a result and given: (i) the inability of the Company to
control the day-to-day operational activities of Lekoil Nigeria
and/or the distributions made by Lekoil Nigeria; and (ii) the
current disputes between the Company and Lekoil Nigeria, the
Company sees little likelihood of the Company realising its
investment in Lekoil Nigeria and as such, has impaired its
valuation of the equity investment in Lekoil Nigeria to nil
value.
The Company will continue to seek to ensure that Mr. Akinyanmi
be restricted from continuing in this role as CEO of Lekoil
Nigeria, as per the provisions of his employment contract with the
Company. The Company reserves its rights to challenge the validity
of any actions in breach of these provisions and would advise
relevant parties to seek the relevant legal advice.
Intercompany receivables
The Company is aware that Lekoil Nigeria Limited is unlikely to
agree on the exact intercompany debt position and the Company
emphasises that it expects it will have to commence litigation to
recover the intercompany loans and that the recovery of the
intercompany loan amounts cannot be guaranteed to be successful
either due to a failure to win the relevant litigation and/or an
ability to effectively enforce a judgment or because the Company at
the relevant time does not have the financial resources to pursue
the recovery of the intercompany debts.
CEO Loan
On 9 December 2020, the Company extended the term of the loan
made to Mr. Akinyanmi until 9 December 2021 with the following
terms: immediate payment of US$0.4 million, with the balance on the
loan is settled by quarterly payments of interest and principal at
a revised interest rate of 10% plus 3 months LIBOR ("Amended Loan
Agreement"). The initial US$0.4 million was settled by Mr.
Akinyanmi. Mr. Akinyanmi was due to make the second instalment
payment of US$413,523 on or before 9 March 2021. As the Company had
not received this payment, actions under the terms of the amended
loan agreement were initiated such that a portion of the salary
payable to Mr. Akinyanmi was applied towards the outstanding CEO
Loan, as agreed in the Amended Loan Agreement as a method of
default recovery, until the repayment schedule is satisfied. As the
Company considers the CEO Loan to be in default, under the
agreement, an additional interest of 4% per annum was applied to
amounts in arrears under the agreed payment schedule. After
the termination of Mr. Akinyanmi's executive contract with the
Company in June 2021, those salary deductions ceased. Mr. Akinyamni
was due to make the third instalment payment (US$404,052) on 9 June
2021, the fourth instalment payment (US$ 394,581) on 9 September
2021 and the fifth instalment payment (US$ 385,636) on 9 December
2021. None of those payments were received and the Company has
commenced legal proceedings to recover the amounts owed.
Option Agreement
In February 2022, the Company entered into a convertible
facility agreement with Savannah Energy Investments Limited ("CFA
2" and "Savannah") whereby Savannah would support the Company by
providing a GBP0.9 million loan to the Company. The Company has
also signed an Option Agreement with Savannah granting it, subject
to approval of the Company's shareholders at an extraordinary
general meeting (the "Savannah EGM"), an option to be assigned the
intercompany debt owed to the Company by Mayfair Assets &
Trusts Limited (the "Mayfair Loan"). A US$1 million payment is
payable by Savannah to the Company upon such assignment.
The Savannah EGM was held on 8 April 2022 and the Company's
shareholders approved the entry into of the Option Agreement.
The Company notes that there is no guarantee that Savannah will
exercise its rights under the Option Agreement nor that Lekoil
Nigeria (and/or Mr. Akinyanmi) will not seek to challenge or
injunct the operation of the Option Agreement (including by way of
a Court process in Nigeria).
Equity shareholding in Lekoil Nigeria
The Company holds a 40% ownership interest in Lekoil Nigeria and
is entitled to 90% of any distributions i.e. dividends, other
distributions and any return of capital (whether following
winding-up, reduction of capital or any other forms of return of
capital) from, Lekoil Nigeria. On 1 April 2021, the Directors of
Lekoil Nigeria informed the Company that its board would start
operating and making decisions related to its operations as
contained in the Shareholders Agreement. The board of Lekoil
Nigeria further stated that it would no longer fund any of the
costs of the Company and its subsidiaries, thereby significantly
limiting the ability of the Company to access operational
funds.
Given: (i) the inability of the Company to control the
day-to-day operational activities of Lekoil Nigeria and/or the
distributions made by Lekoil Nigeria; and (ii) the current disputes
between the Company and Lekoil Nigeria (and its CEO), the Company
sees little likelihood of the Company realising its investment in
Lekoil Nigeria and as such, has impaired its valuation of the
equity investment in Lekoil Nigeria to nil value.
OPERATIONS REPORT
2021 was a year of change for the Company, one in which the
integrity of the corporate structure established at the Company's
foundation and the integrity of those entrusted to implement it,
were tested and (in some cases) found wanting.
In January 2022, Mr. Akinyanmi commenced a legal action in the
Cayman Islands, challenging the validity of two resolutions which
were duly passed at the Company's Annual General Meeting held on 21
December 2021.
As stated above, in February 2022 the Company entered into a
convertible facility agreement with Savannah.
Prior to agreeing the Savannah transaction, the Board was aware
that the transaction had received the support of the Company's
major institutional shareholders, representing approximately 42% of
the Company's then current issued share capital. This shareholder
support for the Savannah transaction puts into context the
subsequent actions of Mr. Akinyanmi and Lekoil Nigeria in seeking
to overturn the Savannah transaction and the CFA transaction.
In early March 2022, the Company was successful in discharging
the ex-parte injunction of Mr. Akinyanmi that sought to restrain
the issue of shares by the Company. The Company subsequently issued
the relevant shares under CFA 1 and CFA 2.
In Q1 2022, the Company continued its English court litigation
to recover the CEO Loan from Mr. Akinyanmi, with the outstanding
amount being circa US$1.5 million. Unfortunately, the Company was
denied jurisdiction to do so by the English court. Similarly, Mr.
Akinyanmi was denied jurisdiction in the New Jersey court to bring
a claim related to the termination of his employment by the
Company. The net result of these litigations is that the Company
expects to pursue the recovery of the CEO Loan via a debt recovery
procedure in New Jersey and the Company expects Mr. Akinyanmi to
commence arbitration in the UK related to the termination of his
employment contract.
On 15 March 2022, Lekoil Nigeria suspended its offer to purchase
shares in the Company. As at 28 February 2022, Lekoil Nigeria held
11.35% of the then issued share capital of the Company. As at the
date hereof, the Company has not received any more recent
notifications from Lekoil Nigeria as to its shareholding in the
Company.
In April 2022, Lekoil Nigeria offered to purchase the Mayfair
Loan and to repay the outstanding amount under CFA 2. Neither offer
was capable of acceptance by the Company as it would have caused it
to be in breach of written legally binding obligations to Savannah.
The Company noted at the time of the offer that Lekoil Nigeria had
chosen to conduct the negotiation process by way of public
announcement rather than private dialogue with the Company and that
the offer should not be seen as a serious attempt to provide an
alternative to the Company and its shareholders but as an attempt
to muddy the waters prior to the Savannah EGM. On 8 April 2022, at
the Savannah EGM, our shareholders duly approved the Option
Agreement entered into with Savannah and also authorised the
Directors to issue a certain number of additional ordinary shares
in the Company.
In early April 2022, Lekoil Nigeria (along with various of its
subsidiaries) notified the Company of an ex-parte injunction
granted by the Federal Court of Nigeria, Lagos Division, to
restrain various actions of the Company. The Company has challenged
the jurisdiction of the Nigerian court to make such an order and
the matter is proceeding through the courts.
In April 2022, the Company noted that Lekoil Nigeria had
announced the spud of the Otakikpo-4 well as part of the Phase 2
development of Otakikpo. The Company received no further
information about this from Lekoil Nigeria.
On 18 May 2022, the Company's ordinary shares were admitted to
trading on the Access segment of the AQSE Growth Market operated by
the Aquis Stock Exchange (AQSE).
The Company noted at the time of the admission to AQSE that the
Board is of the view that the Company's primary activity now is the
recovery of its investment through litigation against the Lekoil
Nigeria group and Mr. Akinyanmi and that this characterisation will
allow the Company to fulfil its disclosure obligations to the AQSE
market, noting that a successful recovery of the intercompany debts
due to the Company will be the primary source of value for
shareholders (with minimal value attributable to the day-to-day
operational activities of Lekoil Nigeria).
This characterisation of the Company, as a litigation vehicle
with minimal value attributable to the shareholding in Lekoil
Nigeria, is implicit to and reflected in the financial accounts
presented for the year ended 31 December 2021.
On 27 May 2022, the Company held an extraordinary general
meeting at which shareholders approved the appointment of Bright
Grahame Murray as the Company's auditors.
On 9 June 2022, the Company announced that Mr. Olapade Durotoye
was appointed as the new Non-Executive Chairman of the Company,
that Mr. Guy Oxnard had become the Company's Executive Director and
that Mr. Dipo Sofola had been appointed a Non-Executive Director.
On 30 June 2022, the Company announced that Mr. Anthony Hawkins and
Mr. Al Tindall stepped down from the Board effective 30 June
2022.
On 30 June 2022, the Company announced and published the 2021
Annual Report and Financial Statements.
Post Period End
The Company anticipates that the suspension in trading will be
lifted by AQSE following the publication of this Report. The
Company will continue to seek recovery of the CEO Loan, defend the
litigation that Mr Akinyanmi and Lekoil Nigeria have brought
against it, and it will take further steps to recover its
investments in Lekoil Nigeria and its subsidiaries.
Outlook
The Company continues to face considerable challenges in 2022,
largely brought about by the legal actions of Lekoil Nigeria and Mr
Akinyanmi. The Board is, and will continue to be, committed to
running the Company in an ethical, efficient and cost-effective
manner. The Company continues to focus on recovering as much value
as possible for shareholders from the assets of the Company, which
include recovery of the CEO Loan and the intercompany loans and
receivables owed by Lekoil Nigeria and its subsidiaries.
In face of litigation brought by Lekoil Nigeria and Mr.
Akinyanmi, Mr. Akinyanmi's refusal to repay the CEO Loan, Lekoil
Nigeria's failure to recognise the full value of the intercompany
recevieable owed to the Company, and Lekoil Nigeria's refusal to
comply with and adhere to the terms of the Shareholders Agreement,
the Company is subject to a number of material uncertainties.
Should the Company be unsuccessful in striking out or defending any
or all of the actions brought against the Company by Mr Akinyanmi
and or Lekoil Nigeria, the Company may be required to satisfy the
liquidated damages provisions under the CFA1 and CFA 2 agreements
previously announced, amongst other matters, and such events or
conditions in the longer term may cast significant doubt upon the
entity's ability to continue as a going concern and ultimately
could potentially lead to the company going in to administration.
Whilst the financial position of the Company remains fragile and
depends on the receipt of the monies under the Option Agreement,
the recovery of the CEO Loan, the intercompany receivable, equity
funding from shareholders and/or recovery of legal costs following
success in litigation, we are
striving to ensure that the Company is fully financed so it can
implement its plan to recover as much value as possible for its
shareholders from the investments made to date.
We thank our shareholders for their support whilst we pursue
these objectives.
This report was approved by the board on 25 July 2022 and signed
on its behalf.
Olapade Durotoye
Non-Executive Chairman
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK domestic law by virtue of the European Union (Withdrawal) Act
2018 ('MAR'). Upon the publication of this announcement via
Regulatory Information Service ('RIS'), this inside information is
now considered to be in the public domain.
For further information, please visit www.lekoilplc.com or
contact:
First Sentinel Corporate Finance Ltd (AQSE
Corporate Adviser)
Brian Stockbridge +44 203 989 2200
Tennyson Securities (Broker)
Peter Krens +44 20 7186 9030
--------------------
Camarco (Financial PR Advisor)
Billy Clegg / Owen Roberts / Violet Wilson +44 20 3757 4983
--------------------
Statement of Comprehensive Income
For the six months ended 30 June 2022
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
$000 $000 $000
OTHER OPERATING INCOME
Cost of sales - - -
------------
Gross (loss) - - -
--------- --------- ------------
Impairment of investments - - (7,396)
Impairment of intercompany
receivables - - (232,411)
Administrative expenses
Recurring administrative
costs (944) (820) (418)
--------- ---------
OPERATING LOSS (944) (820) (240,225)
--------- --------- ------------
Finance income 1,780 13,880 3,061
Finance cost -
--------- --------- ------------
PROFIT/(LOSS) FROM CONTINUING
ACTIVITIES BEFORE TAXATION 836 13,060 (237,164)
Tax expense - - -
--------- --------- ------------
PROFIT/(LOSS) FOR THE
PERIOD ATTRIBUTABLE TO
THE EQUITY HOLDERS 836 13,060 (237,164)
========= ========= ============
TOTAL COMPREHENSIVE LOSS
ATTRIBUTABLE TO THE EQUITY
HOLDERS 836 13,060 (237,164)
========= ========= ============
Loss per share - basic 0.001 0.024 (0.44)
Loss per share - diluted 0.001 0.024 (0.44)
========= ========= ============
Statement of Financial Position
At 30 June 2022
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
$000 $000 $000
NON CURRENT ASSETS
Investments - 7,431 -
---------- ---------- -------------
- 7,431 -
CURRENT ASSETS
Trade and other receivables 136,954 389,567 135,174
Cash and cash equivalents 547 1 50
---------- ---------- -------------
TOTAL CURRENT ASSETS 137,501 389,568 135,224
TOTAL ASSETS 137,501 396,999 135,224
========== ========== =============
EQUITY
Share capital 38 27 27
Share premium account 265,500 264,004 264,004
Share based payment reserve 10,259 10,259 10,259
Retained earnings (139,755) 109,547 (140,591)
---------- ---------- -------------
TOTAL EQUITY 136,042 383,837 133,699
---------- ---------- -------------
CURRENT LIABILITIES
Trade and other payables 1,459 13,162 1,525
---------- ---------- -------------
TOTAL CURRENT LIABILITIES 1,459 13,162 1,525
TOTAL LIABILITIES 1,459 13,162 1,525
---------- ---------- -------------
TOTAL EQUITY AND LIABILITIES 137,501 396,999 135,224
========== ========== =============
Statement of Changes in Equity
For the six months ended 30 June 2022
Share Share Share Retained Total shareholder
capital premium based losses equity
payment
reserve
$000 $000 $000 $000 $000
Balance as at 1 January
2021 27 264,004 10,173 96,573 370,777
--------------------------- --------- --------- --------- ---------- ------------------
Profit for the period - - - 13,060 13,060
--------- --------- --------- ---------- ------------------
Total comprehensive
income for the period 27 264,004 10,173 109,633 383,837
--------- --------- --------- ---------- ------------------
Issue of ordinary shares - - - - -
Total transactions with
owners 86 (86) -
--------------------------- --------- --------- --------- ---------- ------------------
Balance at 30 June 2021 27 264,004 10,259 109,547 383,837
--------------------------- --------- --------- --------- ---------- ------------------
Loss for the period (250,138) (250,138)
--------- --------- --------- ---------- ------------------
Total comprehensive
income for the period 27 264,004 10,259 (140,591) 133,699
--------- --------- --------- ---------- ------------------
Issue of ordinary shares - - - - -
--------- --------- --------- ---------- ------------------
Total transactions with - - - - -
owners
Balance as at 31 December
2021 27 264,004 10,259 (140,591) 133,699
--------------------------- --------- --------- --------- ---------- ------------------
Profit for the period - - - 836 836
--------- --------- --------- ---------- ------------------
Total comprehensive
income for the period 27 264,004 10,259 (139,755) 134,535
--------- --------- --------- ---------- ------------------
Issue of ordinary shares 11 1,496 - - 1,507
Total transactions with
owners 11 1,496 - - 1,507
--------------------------- --------- --------- --------- ---------- ------------------
Balance at 30 June 2022 38 265,500 10,259 (139,755) 136,042
--------------------------- --------- --------- --------- ---------- ------------------
Statement of Cashflows
For the six months ended 30 June 2022
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
$000 $000 $000
Operating activities
Loss before taxation 836 13,060 (237,164)
Impairment - - 7,396
(Increase)/decrease in trade and other
receivables (1,780) - 246,790
(Decrease) / increase in trade and
other payables (66) (13,059) (17,209)
---------- ---------- -------------
Net cash used in operating activities (1,010) 1 (187)
---------- ---------- -------------
Cash Flows from Investing Activities
Interest on intercompany receivable 1,780 - -
---------- ---------- -------------
Net Cash generated from Investing 1,780 - -
Activities
---------- ---------- -------------
Cash Flows from Financing Activities
Loans received 1,096 - 237
Loan repayment via issue of shares (1,369) - -
Net Cash generated from Financing
Activities (273) - 237
---------- ---------- -------------
Increase/(Decrease) in cash and cash
equivalents in period 497 1 50
Cash and cash equivalents at beginning 50 - -
of period
Cash and cash equivalents at end of
period 547 1 50
---------- ---------- -------------
Notes to the Interim Results
For the six months ended 30 June 2022
1. GENERAL INFORMATION
Lekoil Limited ("the Company") is a company incorporated and
domiciled in the Cayman Islands. The address of the registered
office is Walkers Corporate Limited, 190 Elgin Avenue, George Town,
Grand Cayman KY1-9001,Cayman Islands
These interim financial statements do not include all of the
information required for full annual financial statements and
should be read in conjunction with the financial statements of the
Company for the year ended 31 December 2021 which have been
prepared in accordance with EU-endorsed International Financial
Reporting Standards ('IFRSs'), IFRIC interpretations as adopted by
the EU.
The financial statements have been prepared under the historical
cost convention except for financial instruments and share based
payments which are measured at fair value. Monetary amounts in
these financial statements are rounded to the nearest $000.
The interim financial statements for the six months ended 30
June 2022 are unaudited and have not been reviewed by the Company's
auditors, Bright Grahame Murray. The comparative interim figures
for the six months ended 30 June 2021 are also unaudited.
2 BASIS OF PREPARATION
The accounting policies applied by the Company in the
preparation of these condensed consolidated interim financial
statements are the same as those applied by the Company in its
consolidated financial statements for the year ended 31 December
2021.
3. EARNINGS PER SHARE
The basic loss per share is derived by dividing the loss for the
period attributable to ordinary shareholders by the weighted
average number of shares in issue.
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December
2022
$000 $000 $000
Profit/(loss) for the period 836 13,060 (237,164)
Weighted average number
of shares 673,394 536,780 536,780
Basic earnings per share 0.001 0.024 (0.44)
During the period, the Company issued 221,997,756 ordinary
shares.
4. TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December
2021
$000 $000 $000
Trade and other receivables 1,774 - 1,647
Intercompany receivables 135,180 389,567 133,527
-------------- -------------- -------------
136,954 389,567 135,174
============== ============== =============
An unsecured loan of US$1,500,000 was granted to a Director on 9
December 2014. The loan had a three-year term and bore interest at
a rate of four per cent per annum. In September 2017, the loan's
maturity date was extended by 3 years to 9 December 2020 under the
same terms and conditions. On 9 December 2020, at the expiration of
the extension, the Board approved a final extension to loan for 12
months conditional on the adherence to the following repayment
terms: immediate payment of US$0.4 million, while the balance on
the loan is settled by quarterly payments of interest and principal
at a revised interest rate of 10% plus 3-month LIBOR. The initial
US$0.4 million was settled by the Director although no other
settlements were made and the loan is in default and accruing
interest at a rate of LIBOR plus 14 per cent on the default amount.
At the period end, 30 June 2022, the balance outstanding, including
interest, was US$1,774,208.
In 2021, the Company commenced a formal review of all the
various intercompany and related party loan positions (noting in
particular that Lekoil Nigeria may no longer qualify as a related
party and that the term "intercompany loans" refers to their
historic characterisation). It is aware that Lekoil Nigeria is
unlikely to agree on the exact intercompany debt position and the
Company emphasise that it expects it will have to commence
litigation to recover the intercompany loans and that the recovery
of the intercompany loan amounts cannot be guaranteed to be
successful either due to a failure to win the relevant litigation
and/or an ability to effectively enforce a judgment. The Company
attributes minimal value to the day-to-day operational activities
of Lekoil Nigeria and, as such, has impaired its valuation of the
equity investment in Lekoil Nigeria to nil value.
5. TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December
2021
$000 $000 $000
Trade payables 737 676 1,019
Other payables 137 12,096 237
Accruals 585 390 269
1,459 13,162 1,525
============== ============== =============
On 2nd September 2021, Lekoil Limited announced it entered into
a Convertible Facility Agreement ("CFA") with Hadron Master Fund,
TDR Enterprises Ltd (a company controlled by Tom Richardson) and a
non-related third party (together "the Lenders") to allow it access
GBP200,000 for working capital purposes for a 6-month period.
Hadron will provide GBP100,000 while TDR Enterprises Ltd and the
third party will provide up to GBP50,000 each. The purpose of the
facility is for the payment of corporate costs (regulatory and
compliance and legal fees) and for general corporate purposes as
approved by the Board of Directors. There is the option to convert
the facility in the event of non-payment and expiration of term to
ordinary shares of the Group at the conservation price of 0.5
pence. Interest rate as at 10% per annum.
In February 2022 the Company entered into a convertible facility
agreement with Savannah Energy Investments Limited ("CFA 2" and
"Savannah") whereby Savannah would support the Company by providing
a GBP0.9 million loan to the Company. The Company has also signed
an Option Agreement with Savannah granting it, subject to approval
of the Company's shareholders at an extraordinary general meeting
(the "Savannah EGM"), an option to be assigned the intercompany
debt owed to the Company by Mayfair Assets & Trusts Limited
(the "Mayfair Loan"). A US$1 million payment is payable by Savannah
to the Company upon such assignment.
In March 2022, the Company announced that its lenders under CFA
1 and CFA 2 elected to convert all or part of their Outstanding
Amounts into fully paid ordinary shares of the Company ("Shares")
as follows: Amended & Restated CFA1 - Lenders 42,000,000 Shares
("CFA1 Shares") CFA 2 Lender 157,134,400 Shares ("CFA2 Shares").
The Company has issued the Shares pursuant to those elections.
Following the issuance of the Shares, there are no Outstanding
Amounts under CFA 1 and the Outstanding Amount under CFA 2 is
GBP100,000 as at 30 June 2022.
6. APPROVAL OF INTERIM FINANCIAL STATEMENTS
The Condensed interim financial statements were approved by the
Board of Directors on 25 July 2022. A copy can be obtained on the
Company's website at www.lekoilplc.com
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END
NEXRAMTTMTJTBBT
(END) Dow Jones Newswires
July 25, 2022 08:35 ET (12:35 GMT)
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