10th Aug 2015 16:23
LONDON (Alliance News) - It was a drab Monday morning for shareholders of Afren PLC after the company's shares were officially delisted from the London Stock Exchange, marking the final fall of the former FTSE 250 constituent.
Following the Nigerian oil producer's shares being suspended in July due to uncertainty over its finances, which led to the administrators being called in soon after, Afren's shares were officially delisted by the Financial Conduct Authority on Monday morning.
That has caused a rebel shareholder team, the Afren Legal Action Group, to write to the company's administrators asking for clarity and transparency about the company and its current position as shareholders remain in the dark over the company's dire financial position.
AlixPartners was appointed as the company's administrator at the end of July, about two weeks after its shares were suspended after a fall in production threatened its already controversial and much-debated restructuring plans aimed at saving the company.
Afren previously had said it expected to produce between 29,000 to 36,000 barrels of oil per day in 2015, but admitted that it had "become clear" the company wouldn't achieve the target, meaning it could not accurately inform the market about its financial position.
That also placed the restructuring plans with bondholders at risk, forcing Afren to ask for even more money on top of the substantial amount already needed to be injected and its mountain of debt.
The embattled company said it had exhausted all possible routes to save the company in a short space of time due to the company's dire liquidity issues, but said it failed to secure a revised refinancing and restructuring proposal that would result in Afren being able to pay its debts as they fall due.
The rather sudden collapse of Afren with administrators being appointed was a stark turnaround from the company's position in June, when it said there had been "no significant change in the financial or trading position of the group since March 31, 2015".
One group that will continue to fight Afren for answers is the Afren Legal Action Group, which in July wrote to the City regulator demanding an investigation into whether the troubled oil producer was involved in "the withholding of material information", asking the the UK Financial Conduct Authority to investigate whether Afren operated in "potential collusion with certain bondholders".
Later Monday, the Afren Legal Action Group said it sent an open letter to Afren's administrators, AlixPartners, citing numerous concerns about the transparency of the company and its future.
"We are very concerned re the highly suspicious manner in which Afren PLC has been put into administration. Please be advised that we are in touch with the Financial Conduct Authority, Securities and Exchange Commission and the Nigerian government with regards to the highly questionable and strange developments surrounding the demise of Afren PLC," the group said in the letter.
In addition, the Legal Group has also asked AlixPartners for clarity over the company's current revenue and for how much immediate liquidity is needed to make Afren solvent.
"Even with the lower production figures this year, the company should have generated significant revenues which have not been reported by the management. We hope that you will appreciate the significance of this immediate period just before the administration and will care to provide transparency on where the revenues have disappeared," said the group.
The trust between Afren and its shareholders had been fragile and shattered since October 2013 when former Chief Executive Osman Shahenshah and Chief Operating Officer Shahid Ullah were sacked for accepting unauthorised payments.
That was followed by failed refinancing deals, the collapse in the oil price and dwindled cashflow which wiped away Afren's equity value, as its share price fell by more than 98%, falling from 148.8 pence in July 2014 to 1.785p when its shares were suspended.
Afren's former Head of International Relations Simon Hawkins, who left the company in July, released a scathing attack on the company via social media on Monday after the final nailed had been put in.
Hawkins spent two and a half years at the company and said: "as the company drifted closer and closer toward the black hole of insolvency life became a string of shocking moments I never want to relive."
In the article named "10 shocking moments at Afren I never want to relive", he accuses the company's executive directors of owning undisclosed stakes in one of Afren's subsidiaries which Hawkins said should have made him "resigned there and then".
He also highlighted his fear of the company going bust on "too many mornings" and said the company had already been "dealt enough blows", conceding he also found out the company was entering its "ultimate demise" by finding out the company had entered administration by a post on a public bulletin board.
Hawkins also said he took a "flood of calls" from shareholders who has "lost their life savings and more", which he described as "haunting and heartbreaking. Genuinely".
By Joshua Warner; [email protected]; @JoshAlliance
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