Nigerian oil firm Lekoil flags going concern risk as troubles run into 2021

Oct 18 (Reuters) - Nigerian oil firm Lekoil warned on Monday about its ability to continue as a going concern after posting a $119.3 million loss for 2020, building pressure on the troubled company.

The loss coupled with high costs meant the London-listed firm had to cut about 40% of its staff, renegotiate terms with lenders, plus undertake measures to reduce overheads, Lekoil said. It did not give details on the headcount reduction.

Earlier this year, the company lost a fight with its top shareholder over board representation. The dispute between Lekoil’s founder Lekan Akinyanmi and Metallon even drew in Nigeria’s Ministry of Petroleum, mounting further pressure on Lekoil following a fraudulent loan in 2020.

“The board is currently working to present a standalone financial position of the company (and its wholly owned subsidiaries) prior to its next fundraising,” interim Executive Chairman Anthony Hawkins said in a statement.

Lekoil, which had cash and cash balances of about $3 million at the end of last year, said “considerable” challenges it faced in 2020 had also run into this year.

“Notwithstanding the material uncertainty, the directors’ confidence in the group’s forecast and the mitigating actions available supports the preparation of the financial statements on a going concern basis,” Lekoil said. (Reporting by Pushkala Aripaka in Bengaluru; Editing by Shailesh Kuber)