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Seplat's chairman steps down – positive for the company

  • Seplat has announced its chairman will step down, a few days after key board member Xavier Rolet's resignation

  • We expected Ambrosie Orijako to resign and/or a reshuffling of the board

  • The timely response to shareholders' concerns over recent court cases is positive. We reiterate our Buy recommendation

Seplat's chairman steps down – positive for the company
Janet Ogunkoya
Janet Ogunkoya

Senior Research Analyst

Tellimer Research
18 November 2021
Published by

Seplat Energy announced yesterday that co-founder Ambrosie Orjiako will be stepping down as the company's chairman and from the Board of Directors, although not until the May 2022 AGM.

This follows the resignation for "personal reasons" on 12 November of a key non-executive member of the board, Xavier Rolet, and is in line with our view that personnel changes at board level were extremely likely.

Seplat's corporate governance risks, already high, notched up again with the announcement last week that it is caught up in another court case – this time between Zenith Bank and companies related to Seplat in which Orijako has an interest. Zenith has initiated a US$78mn debt case against a debtor — Shebah Exploration and Production Company Limited — and its loan guarantors — Shebah Petroleum Development Company Limited and Dr Ambrosie Orjiako. Orjiako holds substantial stakes in the two Shebah companies. He also holds a 6.4% stake in Seplat, while Shebah Petroleum Development Company Limited holds 2.6%.

This comes just after the resolution of the Cardinal Drilling case with Access Bank, which cost Seplat US$36mn.

Since the announcement of Orjiako's departure, Seplat London has gained 2% — the second rise and the highest of the two since the announcement of the court case last week — while the Lagos line has traded flat.

We have a Buy recommendation on the stock at target prices of GBP1.90 and NGN1,076. Our view is that the board's timely response to shareholders' concerns is positive for the stock. And, while we recognise that Orjiako has played a key role in Seplat's growth, we believe the current management is capable of running the company successfully.

Seplat NL and Seplat LN share price performance