Big guns roll into SacOil

SACOIL, a troubled oil and gas exploration company that is producing nothing at present, plans to end its seven-month suspension on the JSE and the London Stock Exchange with a revamped board full of heavyweight clout - and political connections.

The company was first listed under another name, Manga-Chem Products, in 1994.

Former Reserve Bank governor Tito Mboweni joined the board as independent nonexecutive chairman in April, followed by a raft of high-profile appointments including former ambassador and State Security Agency director-general Jeff Maqetuka, and nonexecutive director of the Public Investment Corporation (PIC) Ignatius Sehoole.

The company is led by CEO Roger Rees, best known for serving as financial director at Murray & Roberts.

Rees said the board's immediate task was to address the criticism of poor corporate governance.

"The board must rebuild its audit and risk committees and we anticipate the suspension of the share to be lifted as early as next week. We're putting in place a strong corporate governance framework of committees to be led by Tito Mboweni.

"Tito is well respected and trusted and he has strong leadership skills. He has very quickly strengthened our corporate governance framework."

In August, the company said it would recapitalise with a combination of a rights issue to shareholders and the conversion of existing debt held by Gairloch into equity to wipe SacOil's balance sheet clean.

SacOil has R238-million in debt and aims at a recapitalisation of R800-million.

The rights issue will be voted on in December, but the PIC has given an irrevocable undertaking to support the rights offer to the tune of R330-million. Other institutional shareholders include Metropolitan Asset Managers and Investec Bank.

''The attraction of the company for the new board members is its strong underlying assets, but the company has never been properly capitalised. The oil prospects in the DRC provide huge potential value," said Rees.

''We're on a pan-African mission - a small company but we have a very big reach. We've picked up Botswana and Malawi concessions this year, which will be important to us over the long term. We've also been in Nigeria and the DRC for a long time.

"Over the next two years we will be investing in our Nigerian assets. We're going through the exploration phase. In the last quarter of the next two years we hope to be producing," said Rees.

SacOil originally borrowed money from Renaissance BJM Securities, but the loan was moved to Gairloch, a private investment holding company registered in the British Virgin Islands and controlled by controversial Nigerian doctor and businessman Olatunji Olowolafe.

Olowolafe, whose LinkedIn page lists him as MD of Deux Project, a company offering general civil engineering, construction, consultancy and maintenance services and whose clients include MTN, was arrested in 2010 after a raid by Nigeria's Economic and Financial Crimes Commission following an investigation into allegations of financial misappropriations involving Lagos state governor Babatunde Fashola.

Nigerian news reports claimed he was awarded some 30 state contracts amounting to billions of naira.

Back home, allegations of political favours and financial wrongdoing have also dogged the Moseneke family - which includes Constitutional Court deputy chief justice Dikgang Moseneke - behind the Encha Group, including the exploitation of political connections to clinch oil and gas deals reported by the Sunday Times, as well as news reports of Tiego Moseneke being struck off the roll of attorneys for misappropriating trust fund money.

Rees said he was unconcerned by such issues. "Ololowafe has acted appropriately so far, so we have no problem with him.

"He's just a shareholder, and not a controlling one, either. The novation of the debt was more a commercial decision and we just keep repaying the loan.

"I haven't dealt with the Encha hearsay, but I have no problem with them either," said Rees.