Seplat Admits Spending $19.4m To Defend CEO In Court Against Nigerian Minority Shareholders

The legal battle between Seplat Energy PLC and its Nigerian minority shareholders may have forced the company to spend at least $19.4m on professional fees to defend its Chief Executive Officer, Roger Brown.

Adding to Seplat’s injury is the naira depreciation resulting from the floating of the naira by the Central Bank of Nigeria.

The policy has also slashed the company’s profits by 51 per cent and net financial assets have shed $33.8m.

The situation was contained in its half-year financial statement.

The energy company posted impressive revenue of N278.3bn ($547m), up from the N219.2bn ($527m) recorded in the first half of 2022.

Gross profit increased marginally by 0.7 per cent to reach $276.3 million (N140.58bn), compared to $274.3 million (N114.1bn) in 2022.

Profit for the period rose to N42bn, from N35.4bn posted in the same period last year.

“During the period under review, our operating profit was $118.4 million (N60.2bn), showing a significant decrease of 51.7 per cent compared to the $245.3 million (N102bn) achieved in 6M 2022. This decline in operating profit was attributed to a combination of lower oil prices and foreign exchange (FX) losses due to changes in exchange rates.

“Because of these new CBN guidelines, there was a significant adjustment in the exchange rate between the Nigerian Naira (NGN) and the US Dollar (USD). The closing rate for June 2023 was adjusted to NGN753.01/US$, representing a notable difference from the May 2023 rate of NGN461.28/US$.

“The revaluation of financial assets arising from this exchange rate resulted in a net (non-cash) loss of $33.8 million,” the books revealed.

The company said it incurred general expenses of $65.8m, which is 42 per cent higher than the $46.4m incurred in 2022 half-year.

Seplat decried that the expenses grew due to the legal battle between the company and minority shareholders.

“General and administrative expenses (G&A) amounted to $65.8 million, 42.0% higher than the G&A costs of $46.4 million incurred in 6M 2022.

This increase in G&A costs was mainly due to professional fees associated with the litigation costs in response to the unprecedented and intense period of minority shareholder actions through the Courts and some costs associated with the MPNU transaction. Excluding these exceptional items, G&A costs would have closed relatively flat compared to the previous year,” Seplat revealed.

Seplat shareholders had accused its CEO of discrimination against Nigerian workers.

They had petitioned him to the Ministry of Interior but Brown failed to appear before the Nigerian authority after several summons, the ministry had said.

The aggrieved shareholders control only 0.005 per cent of Seplat issued shares.

Consequently, his Working Permit, Combined Expatriate Residence Permit and Aliens Card (“CERPAC”) and other Visas for entry or stay in Nigeria were withdrawn by the Nigerian Immigration Service.

Further to this problem, Moses Igbrude and others in Suit No. FHC/L/CP/402/2023 petitioned the CEO in the Federal High Court sitting in Lagos. The petitioned commenced on 8th March.

“The Court ordered the Petitioners to pay N1 million in costs. This followed the filing of a Notice of Discontinuance by the Petitioners,” Seplat said.

Another case came up at the Federal High Court in Abuja.

Seplat said, the “Federal High Court in Abuja had struck out the criminal charge brought by the Nigeria Immigration Service against the Company and some of its Officers. The Court fully discharged all named defendants.

“The charge had earlier been withdrawn by the Nigerian Immigration Service on the 20th April 2023 and was in relation to the immigration status of Mr. Roger Brown and the withdrawal of his immigration visa by the Ministry of Interior.

An ex parte Interim Order was obtained from the Federal High Court in Abuja by – Juliet Gbaka & two others in Suit No. FHC/ABJ/CS/626/2023.

The case will be heard on 3rd October 2023 at the Federal High Court and 31st October 2023 at the Court of Appeal.