Femi Otedola, the majority shareholder of Forte Oil Plc, has revealed plans to buy out the company’s upstream services and power distribution firm in an efforts to shore up company’s share price.
This plan for the deal, expected to be ratified by the shareholders of the company on February 7, 2019, was revealed in a letter by Akinleye Olagbende, Forte’s Company Secretary, to the Nigerian Stock Exchange (NSE) yesterday.
The letter stated that Otedola’s 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. This effort, Olagbende revealed was met 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. 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 analysts say the divestment would enable Otedola to focus more on his core business area. \lsd