Femi Otedola, the erstwhile majority shareholder of Forte Oil Plc, today announced his exit from the firm, in a post on his Instagram page.  

During the day’s trading session, 970,166,694 units of Forte Oil Plc were done as offmarket trades today at N66.25 in five deals.  

Last December, when it made the announcement, Forte Oil stated that Otedola’s decision was premised on his desire to invest the proceeds in harnessing and maximizing business opportunities in refining and petrochemicals. 

  • Otedola bought the company’s upstream, power and Ghanaian units.  
  • His exit means that Prudent Energy (run by Abdulwasiu Sowami) has now taken control of the firm.  
  • The move however could mean that the company may have to take the following key decisions.  

Next Move: The next possible move will be to install a new management team that will takeover from Akin Akinfemiwa and his young executives.    

  • Following Otedola’s take over of the firm, there was a change in key management.
  • Thus, this same action will be expected in the coming days and weeks.
  • Akin Akinfemiwa and his team have run Forte Oil for the last 8 years taking it from a loss making non dividend company to a profitable one that paid dividends over the years. 

To delist? Otedola’s exit means that the new dominant shareholder will have to decide on either remaining on the Nigerian Stock Exchange (NSE) or delisting.  

  • NIPCO Plcwhich took up a majority stake in Mobil Oil Nigeria Plc, embarked on a Mandatory Take Over (MTO) shortly after.  
  • AMTO means that the dominant shareholder makes a buy offer for the shares it does not own from minority investors. 
  • SEC Rules and Regulations require a Mandatory Takeover bid be made to all shareholders of a public company by any party that acquires 30% or more shares of the company.

Name change: Its also unknown if the new majority owners will maintain the current name or change it but this is plausible.

Business day
  • A change in name would have significant implications in terms of finance, as well as the brand as a whole.  
  • Perhaps by pure coincidence or stroke of luck, Femi Otedola was closely associated with the brand, due to the somewhat eponymous initials FO. 
  • He, is also one of the few billionaires with an active social media presence.  
  • The firm went by the name African Petroleum, before a rebrand to Forte Oil Plc in December 2010. This was a few years after Otedola took a majority stake.  

Companies in the downstream sector have struggled, as they are forced to rely on the Nigerian National Petroleum Corporation (NNPC) for products.

  • The current landing price of petrol is way higher than the pump price, and the government has been unwilling to make an adjustment.  
  • Higher finance costs led to several listed firms either incurring losses, or having significantly lower profit in the first quarter of 2019.  
  • Total Nigeria Plc incurred a N474 million loss after tax, in the first quarter of 2019. 11 Plc ‘s Q1 2019 profit fell by 26%, from N2.7 billion in 2018 to N2 billion in 2019. MRS Oil had a loss after tax of N730 million.  

However, Forte was the outlier with its Q1 2019 profit boosted by earnings from discontinued operations.  

  • Operators, in this space, in a bid to surmount this, have diversified. 11 Plc (formerly known as Mobil) has decided to ram up its aviation and LPG sales.  
  • A few years ago, Forte had launched into the sale of solar products. While the contribution to the bottom-line is small (amounting to N15 million of the N55 billion earned in the first quarter ended March 2019), the firm will have to decide if it will expand on that, or move on to other ventures.  

The journey: Forte Oil PLC was incorporated on December 11, 1964 as British Petroleum Nigeria Limited. After 14 years in operation, the company changed its status from a private limited liability company to a public liability company.

Deal book 300 x 250
  • In 1977, 40% of the company’s shares were sold to Nigerians in compliance with the provisions of the Nigerian Enterprises Promotion Decree of 1977.
  • A year later 60% was acquired by the Federal Government of Nigeria in favour of the Nigerian National Petroleum Corporation (NNPC).
  • In November 1979 the name British Petroleum was changed to African Petroleum PLC.
  • NNPC’s stake in AP was reduced by 20% in March 1989 after the Federal Government sold the above percentage to Nigerian Citizens, increasing their stake from 40% to 60%.
  • In the year 2000, the Federal Government under its privatization programme divested its remaining 40% to core investors and interested Nigerians.

In May 2007,  NNPC’s Pension Fund divested its stake to Zenon Petroleum & Gas Limited, making it the majority shareholder in the company.

Forte Oil Plc closed at N34.65 in today’s trading session, up 10% from the prior day. Year to date, the stock is up 20.73% 

 

 

 

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

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