Zenon Petroleum Petitions Court to Wind Up Ardova Plc over $6m Debt

Zenon Petroleum & Gas Limited has asked a Federal High Court in Lagos to wind up Prudent Energy and Services Limited, which is the parent company of Ardova Plc over the inability of the company to pay a $6 million.

Alhaji AbdulWasiu Sowami is the Chief Executive Officer of Prudent Energy and Services Limited.

In the suit at the Federal High Court, Lagos, with No. FHC/L/CP/1450/2022, the debt was alleged to have arisen from the sale conducted in 2018 where Zenon Petroleum & Gas Limited and its affiliates sold 74.02 per cent of the issued share capital of Forte Oil Plc (now Ardova Plc.) to Sowami and Ignite Investment & Commodities Limited.

It stated that as security for the deferred consideration for the sale of the shares, Prudent Energy and Services Limited and Sowami had provided a guarantee in favour of Zenon Petroleum & Gas Limited and its affiliates for the prompt payment of the deferred consideration as at when due.

In the petition, Zenon Petroleum & Gas Limited alleged that the sum of $6 million being part of the deferred consideration became due on June 18, 2022, and despite the demand letters served on Prudent Energy and Services Limited and its CEO, the debt was not paid.

Zenon Petroleum & Gas Limited therefore urged the Court to wind up Prudent Energy and Services Limited on the ground of inability to pay its debts.

The Nigerian Exchange (NGX) Limited had last month suspended trading in the shares of Ardova and some other companies over their failure to file their audited financial statements for the 2021 accounting year.

However, the suspension was lifted by NGX Regulation Limited, the regulatory arm of the domestic stock exchange, after the company submitted its results, even though it was poor as it recorded a N3.9 billion loss in the year compared with the profit of N1.9 billion it reported the preceding fiscal year.

The loss recorded by the oil and gas company had stemmed from a high cost of sales and operating costs that ate into its margins.  Ardova had blamed the losses on its subsidiary, Axles & Cartage, a transport and haulage services business which commenced operations in August 2020. It also blamed transformational challenges with its recently acquired Enyo Business as part of the reasons for the huge loss.

It had explained: “As a group, we were negatively impacted by our subsidiaries, Axles & Cartage Limited, which faced operational environment issues and the newly acquired Enyo, which is presently undergoing a transformation process to drive operational efficiency and profitability. When subsidiaries are taken consideration the group loss amounts to N3.8bn.”

The company’s CEO, Mr. Olumide Adeosun had also said: “The loss experienced in 2021 are an expected reflection of the strategic inorganic growth programme of the company, and do not affect the viability of the company, especially as some of the immediate benefits of this programme were illustrated by the better year on year performance recorded in our Q1 2022 results.”

Ardova had early this year announced the successful completion of a N25.3 billion Series 1 fixed rate senior unsecured bond issue under its N60 billion debt issuance programme.

The bond issue was the largest local currency bond issuance by an indigenous oil and gas company in the history of the Nigerian debt capital markets. The bond issue was 143 per cent subscribed and comprised 7-year tranche A and 10-year tranche B bonds.  The 7-year tranche A bonds priced at 13.30% and the 10-year tranche B bonds priced at 13.65%.

Ardova had said it would apply the proceeds of the bond issue to fund expansion projects and its working capital requirements.