Wednesday 15 August 2018

Nigerian government is dragged into row as Fanning's San Leon faces new winding-up bid over 'unpaid' €43m

San Leon Energy is headed by Irish businessman Oisín Fanning.
San Leon Energy is headed by Irish businessman Oisín Fanning.
Gavin McLoughlin

Gavin McLoughlin

The Nigerian government has been dragged into a row between Oisín Fanning's San Leon Energy and a Nigerian business which claims San Leon owes it a reported $50m (€43m).

The Nigerian business, SunTrust, told the government that San Leon had failed to comply with a legal requirement to notify the authorities when it took a stake in a Nigerian oilfield.

San Leon acknowledged that "such consent was not obtained prior to the purchase" by the business of its stake in the field, which is known as OML 18.

However, it said that according to its legal advice, this consent was not required.

"Owing to the way that the transaction was structured (and specifically the nature of its indirect interest in OML 18), it was not necessary to obtain prior consent from the minister. Furthermore, San Leon and its partners have today re-confirmed with their legal advisers that this position is correct."

The claim comes as SunTrust seeks to have San Leon wound up on foot of the alleged unpaid debt, which San Leon says it does not owe.

The Irish company is looking to have the legal action struck out, saying that it "believes the claim has no foundation".

It said there were "no outstanding liabilities to SunTrust from San Leon following the issue of San Leon shares to SunTrust in September 2016 - additionally the Nigerian courts lack jurisdiction for any such claim."

It's the second time the company has faced a winding-up application in the last year.

The earlier action came on the back of a long-running row with Dutch company Avobone, which had partnered with San Leon on an asset in Poland. The row was settled but then San Leon ran into difficulty making the payments, leading to a number of changes to repayment schedule. Avobone later petitioned to have San Leon wound up, but San Leon survived and paid everything it owed.

San Leon's biggest shareholder is Toscafund, run by the legendary London hedge fund manager Martin "the Rottweiler" Hughes. Toscafund stepped in to provide a loan to San Leon to help it pay off Avobone.

The company's primary asset is its stake (indirectly held via a complex arrangement) in OML 18. Cashflow from that project had been slow to begin with. As of April 1 2017, it was due $58m (€49m) but had only received $5m (€4.3m). However, San Leon received the full $19m (€16.3) it was owed for the first quarter of this year.

Irish Independent

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