Ardova Acquisition Completed by Wasiu Sowami, Arbitration Victories, and $19 Million Payment to Otedola

Mr. Wasiu Sowami, the Chairman of Ardova Plc, has successfully fulfilled the payment for the acquisition of the company from renowned billionaire businessman, Mr. Femi Otedola. This acquisition was executed through a Special Purpose Vehicle (SPV) known as Ignite Investment and Commercial Limited (IICL) in 2020. Initially, Sowami attempted to avoid paying the outstanding $20 million owed to Otedola after acquiring Ardova. However, an arbitration ruling sided with Otedola, resulting in an awarded sum of $19 million.


In November 2022, Zenon Petroleum and Gas Limited emerged victorious in an arbitration case filed by Ignite Investment Limited at the London Court of International Arbitration (LCIA). This case revolved around the share purchase agreement (SPA) related to the sale of Forte Oil Plc to Ignite Investment Limited. The LCIA ruled in favor of Zenon Petroleum, granting them a compensation of $19.2 million.

In June 2019, Zenon Petroleum successfully concluded the sale of 74.02% shares of Forte Oil Plc to Ignite Investments.


QUICK LOOK INTO ARDOVA

Ardova, formerly known as Forte Plc, achieved a successful turnaround under the leadership of Otedola. Over the past decade, the company has experienced significant growth, with a consistent increase in market capitalization, shareholder funds, and dividend payments. This value accretion was essential in establishing Ardova as a market leader, a position it has maintained even after the acquisition. Otedola expressed his satisfaction that Ardova has sustained its market position and is now unequivocally the largest downstream petroleum marketing company in Nigeria.


About The Dispute

In a letter dated June 17, 2020, the company raised allegations of a breach of warranty concerning the Share Purchase Agreement (SPA) executed on December 20, 2018.

The dispute notice primarily accused Zenon of violating specific warranties outlined in the SPA, prompting the purchaser to assert the corresponding claims against Zenon.


According to the terms of the SPA, the parties agreed to hold a meeting in an attempt to resolve the alleged claims made by Ignite. Unfortunately, this meeting did not yield a successful outcome. Subsequently, Ignite proceeded to file a claim at the London Court of International Arbitration (LCIA) on December 18, 2020. In response, Zenon submitted its reply to the claim and also filed a counter-claim against Ignite.


Ardova recently published its audited accounts for 2022, revealing a significant loss after tax of N7.6 billion, which is a deterioration compared to the N3.8 billion loss recorded in the previous year. The company's financial performance was primarily impacted by escalating operating expenses and substantial finance costs.


One concerning aspect highlighted in the report is the company's loans and borrowing, which reached approximately N59 billion in 2022. This figure is roughly six times higher than its net assets of N9.2 billion. The substantial debt burden indicates the financial challenges Ardova faces, emphasizing the need for effective measures to address its borrowing and strengthen its financial position.

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