Lekoil shareholders have largely endorsed the current management plans, even while the company’s Nigerian subsidiary plans to make its move.
Lekoil held its AGM on December 21. Four directors won re-election, with around 72% of the vote.
Support ebbed to 53% for three resolutions giving the directors authority to issue shares to creditors and lenders. The 10th resolution did not pass. It required a majority of 75% but only received 52.7%.
If Lekoil must first offer shares to existing shareholders if it wants to raise cash from an issue. The 10th resolution aimed to circumvent this.
“In certain circumstances, it may be in the best interests of the company to allot new shares … for cash without first offering them to existing shareholders in proportion to their holdings,” the meeting notice said. This would have given Lekoil’s board the right to offer around 10% of shares without pre-emption rights.
While the UK-based Lekoil can claim a victory in the votes, the fact that its directors only received 72% of the vote is something of a shot across the bows. Institutional shareholders do not vote against directors, as a matter of course, so the voting does reveal some level of discontent.
Offer clock ticking
Lekoil Nigeria issued a statement on the vote.
“Shareholders have sent a very clear message to the Board of Lekoil Limited that their shareholdings are not to be treated with cynical disregard,” it said.
Lekoil Nigeria went on to note it was in the process of buying shares from Lekoil shareholders. The Nigerian company has signed up Marex to execute trades on its behalf.
Lekoil Nigeria said that should Lekoil issue any new shares, this would be dilutive. If Lekoil issues shares this would dilute shareholder’s stake. Lekoil Nigeria warned it would reduce its offer price in response to dilution. The offer runs until January 17.
“Lekoil Nigeria is offering Lekoil Ltd cash, not dilution. That’s a real gift,” said Hudson Sandler’s Mark Garraway, speaking on behalf of the Nigerian company.
Lekoil has not responded to requests for comment from Energy Voice.