REG - Lekoil Limited - Interim Results
25/07/2022 14:45
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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 due to the Company as at 30 June 2022 (unaudited) Amount due to the Company as at 30 June Amount due to the Company as at 31December 2021 Reason for impairment or amendment
2021 (audited)
(unaudited)
Lekoil Nigeria - across two loans due by January 2026 and February 2029 USD $50.9 million USD $41.6 million USD $49.3 million Not applicable
Lekoil Oil & Gas Investments by February 2024 (i.e. Otakikpo) USD $12.9 million USD $19.8 million USD $12.9 million Reflecting repayments and/or the likelihood of recoverability given the likely
need to litigate to recover the sums due
Mayfair Assets & Trust Limited by May 2023 (i.e., OPL 310) USD $1.0 million USD $253 million USD $1.0 million Reflecting Option Agreement with Savannah
Ashbert Oil & Gas Limited by September 2022 (i.e., OPL 325) USD $38.5 million USD $35.5 million USD $38.5 million Not applicable
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 £0.9 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
(http://www.lekoilplc.com/) or contact:
First Sentinel Corporate Finance Ltd (AQSE Corporate Adviser)
Brian Stockbridge +44 203 989 2200
Tennyson Securities (Broker) +44 20 7186 9030
Peter Krens
Camarco (Financial PR Advisor) +44 20 3757 4983
Billy Clegg / Owen Roberts / Violet Wilson
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 2021
2022 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 capital Share premium Share based payment reserve Retained losses Total shareholder equity
$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 ended 6 months ended Year
30 June 2022 30 June 2021 ended
31 December 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 Activities 1,780 - -
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 of period 50 - -
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 £0.9 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 £100,000 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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