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Zenon Petroleum says Prudent Energy statement admits debt of $6 million

Chris Ugwu
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Olumide Adeosun,

Zenon Petroleum and Gas Limited (Zenon) has responded to a press release issued by Prudent Energy Plc which denied it was facing a winding-up charge.

The company (Zenon) said that Prudent Energy in its response admitted to owing it (Zenon) and in fact, paid the first instalment of the debt during the arbitration.

The oil firm stated this while reacting to a press release by Prudent Energy and Services Limited that denied the news in the media over the winding up proceedings initiated against PESL by Zenon Petroleum and Gas Limited (Zenon) over its inability to pay $6 million debt owed Zenon.

What Zenon is saying

“As all others in the public, we read the story of the petition filed by Zenon Petroleum and Gas Limited at the Federal High Court Lagos in Suit No. FHC/L/CP/1450/2022 to wind-up Prudent Energy and Services Limited and the press release of Prudent Energy dated 9 August 2021.

It is useful to underscore that the petition is a matter before the Federal High Court and is not to be publicized by the rules of Court by either Zenon or Prudent Energy. We therefore will not engage Prudent Energy in any exchange on the pages of the newspapers other than to say as follows:

It is left to the High Court or the arbitral tribunal to determine whether the deferred payment was to meet contingent payment or otherwise as asserted by Prudent Energy;

Zenon did not advertise the winding up petition or publish the petition. As a matter of fact, Zenon’s application to advertise the winding–up petition is yet to be heard by the Federal High Court;

Prudent Energy has admitted owing Zenon and in fact, paid the first instalment of the debt during the arbitration Prudent Energy refers to in its public notice; The High Court action referred to paragraph vi of the public notice is being vigorously contested by Zenon; and  The subject matter of the winding-up petition is not before any arbitration panel but before the Federal High Court which is the Court constitutionally empowered to wind up companies unable to pay their debts.

Accordingly, we advise all stakeholders and the general public to disregard the press release issued by Prudent Energy”.

What Prudent Energy is saying

The management of Prudent Energy & Services Limited (PESL) denied the news in the media over the winding up proceedings initiated against PESL by Zenon Petroleum and Gas Limited (Zenon) over its inability to pay $6 million debt owed Zenon.

“The Management of Prudent Energy & Services Limited (“PESL”) has been notified of news circulated in the media on 8 August 2022, alleging that a “charge” to wind-up PESL over an alleged inability to pay $6 million debt has been presented to the Federal High Court by Zenon Petroleum and Gas Limited (Zenon).

“The Sale and Purchase Agreement between Ignite Investments and Commodities Limited (“Ignite”) and Zenon includes final payments graduated over a period to accommodate and, if need be, compensate for any liabilities which might be presented by third parties, but which may have been previously undisclosed by the Seller.

“To Zenon’s knowledge, the subject of Zenon’s Winding-Up petition and its entitlement to any sum from PESL is vigorously contested by PESL through a High Court suit commenced by PESL against Zenon on 21 July 2022 to prevent Zenon from frivolously enforcing the corporate guarantee until the arbitral award has been delivered.

“Zenon is aware that the subject of its petition will be resolved by arbitration very soon. It has nevertheless commenced winding-up proceedings against PESL, a move that obviously seeks to pre-empt the imminent decision of the arbitrators.

“The de facto advertisement, in the form of media publications, of the Winding-Up Petition commenced by Zenon against PESL, when no court has authorised the advertisement of such Petition, is illegal and prejudicial. It is prohibited by Rule 19(1) of the Companies Winding-Up Rules 2001.

PESL will file a complaint with the Nigerian Press Council against the perpetrators of the malicious, libellous, and illegal publications.

“In the meantime, the Board and management of PESL assure all our stakeholders that we run a sustainable business based on sound corporate governance principles and best ethical standards.

“We continue to generate robust cashflows that are in excess of our requirements to fulfil all commitments to counterparties.

“Finally, we confirm that the matter with Zenon is being handled via the proper channels. We kindly request that you ignore the blatant and malicious falsehoods being circulated in the media.”

This is standard practice all over the world in transactions of this nature. And so it was in the sale of Forte Oil Plc (now Ardova Plc) to Ignite.

“Seller and Buyer were, not surprisingly, unable to agree on the above outcome after formal notifications. And the matter was brought before an Arbitration Panel in accordance with the London Court of International Arbitration Rules as provided for in the Share Purchase Agreement.

“Ignite and Zenon together with its affiliates recently concluded the arbitration proceedings for the purposes of determining the amount due from Zenon to Ignite. The arbitrators have indicated that a decision will be made in the month of August 2022.

“PESL, the parent company of Ignite, provided a corporate guarantee to Zenon in respect of any obligations of Ignite to Zenon. The actual obligations of Ignite to Zenon (or vice versa) can only really be determined after the arbitral award has been delivered.

“Zenon presented a winding-up petition against PESL to enforce the corporate guarantee even though the arbitral award that will provide clarity on what may be due to either side is still pending. This petition has neither been argued nor ruled on by the court before which it has been presented”.

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