Japaul oil and gas have announced it will pull out of the equity financing facility $350 million with Milost Global Inc.
In a statement signed by the company’s Acting Managing Director, Akin Oladapo, it noted that in view of the several red flags associated with the planned equity injection, the company has decided to pull out of the deal.
The journey so far
- Recall that Japaul entered into an agreement with Milost Global Inc for a financing facility of $350 million under the Mesa Fund 1, a global opportunity fund that is managed by Milost Global Inc.
- The financing agreement was arranged and negotiated by Palewater Advisory Group Inc in New York and Banklink Africa Limited in Nigeria.
- During the signing of the agreement, Paul Jegede, CEO, Japaul Oil & Maritime Services Limited, noted that the new financing is an opportunity for the company to optimize the potentialities in all areas of its businesses especially in areas of mining which the Japaul Group has diversified into.
- However, revelations by Businessday and other media outlets regarding the integrity of the deal has now resulted in a rethink by the company.
- Ironically, the CEO of the Japaul had admonished Businessday for criticizing the deal calling them out for “purports lies”.
- The hammer for Japaul must have come from SEC who may have waded in after the controversy surrounding the deal appeared to be getting out of hand.
- Unity Bank and Aso Savings had also backed off on the deal.
Poor results continue
Troubled Japaul Oil & Gas in its recently released full-year 2017 Audited accounts reported a loss after tax of ₦13.2 billion (2016 FY: ₦22 billion).
Its Q1 2018 results also show a massive plunge in its turnover from ₦221 million in Q1 2017 to ₦108.76 million in Q1 2018, this represents a massive 50% drop in revenue. Also, its loss before tax also grew from ₦519.7 million in Q1 2017 to an astronomical ₦3.2 billion in Q1 2018.
Japaul has been technically insolvent since 2016 with reported losses every year since 2014, surviving only on bank borrowings and at the mercy of International Oil Companies IOCs which it has contracts with.
Meanwhile, the company acquired an additional loan facility of $9,000,000 from Diamond Bank after an initial $70,000,000 in 2013. It also acquired a loan facility of $20,000,000 from Access Bank in 2014.
The possibility of these banks recovering these loans is unlikely perhaps indicative that the banks may have taken full provisions of the loans.
In its 2017 full year report, the auditors of the company questioned the going concern status of Japaul reporting that “a matter of uncertainty exist which may cast significant doubt on the Group’s ability to continue as a going concern.”
Japaul Oil & Maritime Services Plc was first incorporated in 1994 as a private limited liability company with an authorized and paid up Share Capital of ₦1,000,000 divided into 1,000,000 Ordinary Shares of ₦1 each. The company commenced active business operations in 1997 and is listed on the Nigerian Stock Exchange (NSE).
Japaul Oil shares price is currently traded ₦0.44 as at today on the floor of the stock exchange and its 1-year return is down by 12%.
Milost Global, founded by Mandla J Gwandiso in 2015 is an American Private Equity firm that is headquartered in New York City, with more than $25 billion in committed capital.
Milost is also a provider of alternative capital, mezzanine finance and alternative lending to a broad range of industries across the globe including Technology, Transport, Cannabis, Education, Distribution, Mining, Oil & Gas, Financial Services, Healthcare, Pharmaceuticals, Real Estate, Alternative Energy and Infrastructure Development
Palewater Advisory Group is a multinational corporate and public affairs advisory firm with headquarters in New York. The company specializes in cross-border and Mergers and Acquisitions transactions, financing, public affairs, political campaign capital raising, and strategy.