Otedola to purchase Forte Oil’s holdings in power business

Femi Otedola, the chairman of Forte Oil Plc, has expressed interest to participate in a divestment opportunity that will see the oil and gas firm sell off entire holdings in its power generating business- Amperion Power Distribution Company.

Forte Oil Plc owns 57 percent  of Amperion Power Distribution Company Limited. While Amperion Power Distribution Company Limited owns 51 percent of Geregu Power Plc.

The company in a notice signed by Akinleye Olagbende, company secretary Forte Oil and sent to the Nigerian Stock Exchange on Wednesday stated that it will in light of this as well as other special business resolutions hold an Extra Ordinary General Meeting (EGM) on the 7th of February, 2019.

According to the notice, the first agenda of the meeting is to obtain shareholders approval to enter discussions with Femi Otedola or any company representing him in connections with assets the company wishes to divest from.

The notice also stated that the assets will be subject to an independent valuation, and that the transaction will be carried out on an arms-length basis, and on commercial terms.

The meeting will also see the company seeking approval for its directors and management to approve, sign, and or execute all documents as well as appoint professional parties and advisers necessary to facilitate the divestment process.

The notice explained that an initial approval granted by shareholders in May 2018, to divest the company’s interest in the power business was followed up with a public tender sale process to attract potential investors.

A review of the outcome of the sale process, however showed that management of the company felt there was an unexpected low interest in the bidding process and that pricing proposal did not meet expectations which may not be in interest of shareholders.

The company said that the new proposal by Otedola will be equally subject to review by the company’s management and if successful and in line with regulatory requirements be subsequently examined by an independent financial advisers.

The notice said a successful completion of the process would ensure adequate funding is available for the company’s downstream operations.

“The proceeds of this restructuring exercise will enable your company to compete more favourably and achieve its planned expansion objectives within the downstream sector. This will also reduce our finance cost significantly and increase distributable earnings for the benefit of our shareholders,” the notice explained.

The company in December last year announced Otedola (its majority shareholder) had reached an agreement with the Prudent Energy team, investing through Ignite Investments and Commodities Limited to divest of his full 75 percent direct and indirect investment shareholding in the company’s downstream business.

The transaction is expected to close in the first quarter of 2019 subject to the satisfaction of various conditions and receipt of various regulatory approvals.

Forte Oil share price closed Wednesday’s trading session on the Nigerian Stock Exchange N1.40 higher to settle at N29.40