Downstream oil and gas company, Ardova has informed the Nigerian Exchange (NGX) that it intends to delist as a publicly listed company.
The company claimed it had been approached by its parent company Ignite Investments & Commodities Limited to acquire the shares held by other shareholders of the Company at an offer price of ₦17.38 per share.
Ignite Investments & Commodities Limited currently owns 74% of Ardova Plc and is the majority shareholder of the company.
- “Ardova PLC (“Ardova” or the “Company”) has notified Nigerian Exchange Limited (“NGX”) that Ignite Investments & Commodities Limited has approached the Board of Directors of the Company with an intention to acquire the shares held by other shareholders of the Company at an offer price of ₦17.38 per share, and subsequently delist the Company from NGX (the “Proposed Transaction”).”
According to a statement published on the NGX and across Ardova’s social media handles, seen by Nairametrics the company said it arrived at the share price of N17.38 per share using the 30-60 day volume weighted average share price of ₦14.19 and ₦13.97 respectively, on 30 November 2022
- “The offer price of ₦17.38 represents a premium of 22.44% and 24.38% to the 30-day and 60-day volume weighted average share price of ₦14.19 and ₦13.97 respectively, on 30 November 2022 (being the last trading day prior to the Offer).”
The company has a total external debt of about N55 billion which includes 2 tranches of unsecured corporate bonds totaling around N25.2 billion.
Holders of the bond will have to approve any mergers or consolidations of the company as reported in its financial statements.
- “The Company shall not (i) merge or consolidate with any other person, or (ii) directly or indirectly transfer to any person all or substantially all of its properties or assets as an entirety in one or more related transactions without the prior consent of the Trustees, unless such person assumes the issuer’ obligations under the Bonds.”
Optics
Ardova currently has a free float of 339,962,574 shares and at the offer price of N17.38 per share, it will cost Ignite Investments & Commodities about N5.9 billion to buy out other shareholders. The company has a market capitalization of N22.9 billion as of the date this offer was made.
- Ardova used to be Forte Oil and was acquired in 2019 after billionaire investor Femi Otedola sold the downstream arm of the company.
- By delisting, the company adds to the list of companies that have delisted from the Nigerian Exchange in recent years.
- Ardova’s interim result for the year 2022 reveals a loss after tax of N7.6 billion. The company currently has an accumulated loss of N1.2 billion in 2022 down from N6.5 billion in retained earnings in 2021.
- The company swung into losses as a group after its acquisition of Enyo Retail and Supply in late 2021.
- Soon after this acquisition it lent Enyo N12.3billion in an 8-year loan at an interest rate of 14%
Important to note that Ardova acquired Enyo through a subsidiary Bags and Kegs and as such the acquisition cost was not captured in the books of Ardova Plc.
What this means for Ardova Shareholders
Ardova currently trades at a share price of N17.65 per share and has been down 4% this year but up 38.9% in the last one year.
- The current buyout price offers no upside to existing shareholders of the company as it is slightly lower than the current share price.
- However, we do expect to see a price surge as investors take position ahead of a possible scramble for the shares of the company.
- Ardova is likely to report a loss after tax when it completes its audited accounts. It has also informed investors that it will not be paying any dividends this year.
The deal is subject to the review and clearance of the Securities and Exchange Commission as well as the approval of the shareholders of the Company.
- “The terms and conditions of the Proposed Transaction will be provided in the Scheme Document which will be dispatched to all shareholders following the receipt of an order from the Federal High Court to convene a CourtOrdered Meeting.”
- “If the conditions of the Proposed Transaction are satisfied and same is sanctioned by the Federal High Court, the Company would be delisted from NGX.”
