Thread by @ugodre

Good evening everyone. Welcome to corporate stories with @Nairametrics.

This is part 2 of the Oando story.

Thread starts here

If you are just joining this story for the first time, we suggest you first read Part 1 of the thread here..

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1. Flashback: After the merger, Jite, one of the founding members of Ocean and Oil Ltd, was now also the MD of Oando Energy Services

2. a subsidiary of Oando that was into drilling and provided services to Upstream oil companies.

Oando held 51% equity in that company.

3. Jite was said to be the 'brain force' driving operations in the Oando and basically oversaw the day to day running of the business.

4. JAT, was the face of the business and was tasked with pursuing and closing deals while

5. Mofe was by some account in charge of putting up all the complex legal structures that facilitated deal making.

6. Mofe horned his skills when he was with the law firm of Chief Rotimi Williams’ Chambers, a leading Nigerian law firm,

7. where he specialised in shipping and oil services and worked on several joint venture transactions between the NNPC and IOCs.

8. In 2006, just as the new Oando was still basking in its Public Offer and Rights Issue, opportunity will come knocking again,

9. this time in the form of a notorious government entity, National Fertiliser Company of Nigeria (NAFCON).

10. The company was moribund and so the government of Obasanjo decided it was going to sell it.

11. And so, crony capitalism will once again play its part, in yet another block buster corporate deal.

12. Being friends with people like James Ibori at the time was enough to make any eagle eyed businessman own just about anything.

13. James Ibori was Delta State Governor and was said to had ostensibly approved OBJ's second term via the Governor's forum

14. Mike Orugbo, was said to be one of such close friends of Ibori who had his eyes on NAFCON.

15. A former NNPC executive and owner of an engineering servicing firm that serviced oil companies, this was a big break

16. Mike would soon lead his company, O’secul Nigeria Ltd to bid to acquire the assets of NAFCON in a deal that cost about $152 million

17. The deal was said to be financed via a $150m loan from Oceanic Bank, while Mike secured the $2m.

18. Rumours will later have it that James Ibori through one of his cronies, the accountant Henry Imasekha backed the deal.

19. This would be denied as its typical with transactions like this, the opaque nature ensured no evidence confirmed the rumour.

20. A new company, Notore Chemical Industries Limited will later own the assets taken over from NAFCON in 2005.

21. As fate would have it, Jite Okoloko, a friend of Ibori’s would be called to come and be the MD of Notore Chemicals Ltd.

22. And so ended a chapter in the fascinating story of Oando.

23. With Jite gone as executive director (he still remained as director)it was left to JAT and Mofe to take the company to its next chapter.

24. An inkling into Oando’s next chapter will surface in a 2009 Financial Times interview of JAT.

25. By 2009, Oando was already the market leader in the downstream sector and was posting

26. group revenues of N337b up from the N183b it reported just after the famous Public offer and Rights Issue.

27. Its earnings per share had also risen from N2.65 to N11.32 within the same period. The sky seemed to be the limit at the time.

28. As a leader in the downstream and midstream of the oil and gas sector, the next step .

29. was to conquer the upstream market, where they already had an interest, but needed to as you'd expect take the lead.

30. And so he was asked by the FT journalist, "where do you want to be in terms of production?"

His response was succinct and assertive

31. “We have a plan to get 100k bpd. I think we have a five year plan to get 100k bpd by 2013, with 300m barrels of reserves.”

32. Bemused, the reporter asked

“Now, how do you get to this?”

33. JAT responded “By a combination of exploiting our licenses, and producing our own fields, as well as acquiring assets,

34. just like we did last year, when we acquired a 15 per cent stake in two blocks [from Italy’s Agip] for 200m naira ($1.3m).

35. There are more of those acquisitions to come.” EOQ.

Of course, more was to come

36. Flashback: JAT had built a craving for acquiring just about anything he wanted with only cash the snag.

37. And by reputation, that was the least of his issues. He had already found the holy grail to raising just about any cash he needed.

38. Add that to providing just the right vehicle & alliances,the hard part was perhaps dealing with regulators.

That, he also had balls for

39. In 2005, just as Nigerians were still basking in the oversubscribed offer, the trio set their sights on the south side of the continent.

40. They came up with yet another audacious plan to list on the Johannesburg Stock Exchange, never before done by any African owned company.

41. Just 39yrs at the time, critics again, joked at the share audacity of this move. But to JAT it was an important part of raising capital.

42. They knew they had to build a solid reputation as not just a Nigerian entity but one with the right corporate governance and structure

43. to list not just in the second but in the largest stock exchange in Africa.

This model would become handy a few years down the line.

44. For now listing on the JSE gave them access to capital to fund rig ownership,invest in upstream assets & expand their midstream business

45. Back to FT: Being able to own an asset that produced 100kbpd could only arise if there were upstream assets available to buy.

46. By 2010, Oando had direct and indirect interest in a whopping 44 subsidiaries,

47. most of which held its interest in Oil Blocs, Gas Companies, Rigs etc.

But he needed to go for the juggernaut

48. As the Jonathan administration secured a new 4 year term in 2011, the Ministry of Petroleum resources

49. under the leadership of a rising power broker, Diezani Allison-Madueke, oversaw the divestment of the interest of IOCs in oil blocks.

50. IOCs were selling their holdings in “juicy” oil blocs to local Nigerian business,

51. in what would eventually become one of the largest economic scams in Nigeria’s history.

52. Oando wasn’t going to miss out on this sale and set their sights on what was perhaps the biggest of them all.

53. Conocco Phillps, an American Oil based company was divesting from OML 131 and valued its stake at about $1.7b.

54. To show its commitment to acquiring the asset, Oando needed to stump up about $435m, representing 25% of the purchase consideration.

55. JAT had a grand plan and this involved a strategy from one of his play books.

56. Rather than have Oando Plc purchase OML 131, he would use a different entity.

57. In 2012 and riding of the reputation of listing on the JSE years ago, JAT would lead Oando to acquire

58. a Canadian Entity known as Exile Resources Incorporated via what is called a reverse listing.

59. A reverse listing is an acquisition of a listed coy by a private coy,resulting in d private firm listing its shares on a stock exchange.

60. It’s basically used by private firms to list their shares on the stock exchange without

61. having to pay expensive cost of public listings and going through tough regulatory scrutiny.

62. Oando acquired 94% of Exile and changed the name to Oando Energy Resources (OER)

63. Just like the JSE listing, JAT and Mofe now had another company listed in an even more glamourous stock exchange.

64. But this wasn’t about glamour. OER would be the vehicle that would own most of Oando’s upstream assets

65. and would also own beneficial interest in several other entities incorporated in tax havens such as the British Virgin Islands.

66. To secure the funding for the $435m, JAT had a grand plan.

67. He would need secure funding from a combination of banks and HNI's.

68. This would help me pay for the $435m and buy him time to look for the balance $1.35 billion and even repay the $435.

69. Typically deals like these are funded with a hybrid of debt and equity.

70. The equity part is from the company’s cash or from new equity.

But Oando in 2012 had a net current asset (liability) of -N161b.

71. That, sort of balance sheet for project or asset finance of this nature was a no, no.

72. In fact, it technically had no cash. The N13b cash in the bank was zilch if you netted off the N48.5b it owed banks in overdrafts.

73. But snags like theses don’t scare or deter JAT and Mofe. In fact, it spurs them and they were after all, corporate titans already

74. So, JAT and Mofe rolled out their grand plan. They would pull up a list of highly influential people whom they could call up for cash.

75.The Italian, who had come into Nigeria around the time JAT and Mofe were a teenagers

76. had grown to be one of the most influential business men in Nigeria. He basically controlled the ports

77. This was 2012 and Gabriele Volpi, friends and business partners with Atiku and a lot of other politicians had the cash they needed.

78. Volpi had just the right vehicle to do this deal. His company Ansbury Investment Ltd, registered in Panama, another tax haven, it was

79. Thus, in 2012 Ansbury would acquire 60% of OODP. OODP also owned 43% of Oando Plc and the majority shareholders of Oando Group.

80. Volpi, via Ansbury, therefore indirectly, or so he thought, owned about 26% of the Oando Group.

81. Ansbury would even do more than investing via equity. The kids he had met via his political allies had impressed him enough to invest

82. Ansbury thus lent OODP another $50m (N7.7b) to help augment funding for the $435m Oando needed to show firm commitment for buying COP.

83. Another VIP on their list of contact was a notable power broker in the PDP whom the EFCC once accused of running a smuggling ring.

84. Alhaji Dahiru Mangal, reportedly funded the election of former president late Yaradua, right from his Gov election days and was a HNI.

85. Through a special placement by Oando, Mangal would acquire 4% of Oando Plc using 5 different proxies as shareholders.

86. In typical Oando fashion, OODP which owned 94% of OER, lent its subsidiary $200m at an interest rate of 5% to pay for the 25% deposit.

87. The $200m from OODP was presumably from the sale of shares to Ansbury.

88. OER will eventually pay the $435m after adding the $200m from OODP to another N27.2b from Nigerian banks

89. By 2013, Oil prices was trading well above $103 and the prospects of owning COP became even more salivating for all parties

90. Everyone wanted this deal to proceed no matter what, but Diezani, the new power broker in town stood in the way.

91.However, with Volpi and Mangal already part of this transaction, Diezani will eventually bow to pressure, approving the deal in June 2014

92.So, in July 2014, Oando (OER) successfully paid for the acquisition of COP, one of the biggest oil deals ever to take place in Nigeria.

93. JAT and Mofe did it again, against all odds.

Oando’s share price soared to N29, 100% gain from the N15 it traded a month earlier.

94. Investors perhaps turned a blind eye to the crushing debts the company was carrying.

95. By our estimates, Oando had borrowed up to N200b to finance this transaction.

96. Their loan book had also ballooned from about N113b in 2012 to about N470b by the end of 2014.

97. In that same year, crude experienced a massive correction that would see prices go from $100 when they closed the deal to $55 by Dec.

98. Investors soon became jittery and the share price will plummet to about N17 by the end of the year.

99. A defiant JAT will later tweet in December that

100. “The COP acquisition was a master stroke for us. It will take bil of $ and decades to replace these assets.

101. “And to think we only just started ....Excited about our next stage of development and the African indigenous hydrocarbon renaissance.”

102. Of course this was in December 2014 when no one knew how bearish the oil market would turn

103. But in his very sharp mind, he and Mofe probably knew the biggest battle yet, for them, was lurking.

104.It was a battle of survival that will require that he uses all the skills he had learnt as CEO of Oando for nearly 2 decades to confront

105. The battle on many fronts centered on the survival of Oando and his reputation as a board room maestro.

106. The closure of the COP transaction was to become the opening of a new vista of multiple setbacks.

107. It would precipitate the squabbles between JAT, Mofe and 2 of the most feared businessmen in Nigeria, Alhaji Mangal and Gabriele Volpi.

108. We have come to the end of Part 2 of this series. Apologies, for the suspense. We are as intrigued by all this as you are.

109. The time and day for the final part will be communicated soon.

If you found this thread useful,do rt d very first tweet of the thread

110. Also kindly ignore typos forgive for spellings. Tough doing this on twitter.

111. Do visit our website nairametrics.com for more and subscribe to our Newsletters.

Thanks for reading.

*End*

This should be "reverse takeover"