On 31 January 2008, Oando Plc, Nigeria’s leading indigenous integrated oil & gas company, listed on the Lagos and Johannesburg Stock Exchanges, executed a US$200 million 2 year NGN-linked bilateral Loan Agreement with Merrill Lynch International (the “Loan”). The Loan was fully guaranteed by Zenith Bank (“Zenith”) and Guaranty Trust Bank (“GTB”) of Nigeria. The Loan forms part of a comprehensive funding package structured by Merrill Lynch for potential acquisitions by Oando in the upstream market in Nigeria.
Unique and novel aspects of the Loan include the following:
- The largest ever NGN linked bilateral loan made to a Nigerian corporate;
- First ever equity financing bridge loan made to a Nigerian corporate;
- Record execution time from mandate to funding of 3 weeks for a Nigerian bilateral loan;
- Innovative 2 year NGN-linked loan targeted at attracting offshore investor interest in the NGN; and
- First time that a guarantee structure using the very high quality Zenith and GTB names is used.
Merrill Lynch International (“Merrill Lynch”) acted as the Sole Arranger and Lender to Oando for the Loan.
Wale Tinubu, Group Chief Executive of Oando, said: “This transaction has allowed us to participate competitively in a potential upstream acquisition in Nigeria, and in the future will form part of bridge financing for the assets of this nature. The speed with which the financing was put in place, and the nature of the financing – an equity bridge – are both firsts for Nigeria and for Oando. The combination of Merrill Lynch, GTB and Zenith has made this financing possible. ”
“The Oando credit itself, the guarantees from GTB and Zenith Bank, and the specific acquisition opportunity are what led to the equity bridge financing being arranged and placed in such record time” said Alex von Sponeck, Head of Sub-Saharan Africa, Global Markets, at Merrill Lynch in London. “This is a first for Nigeria, and is a structure for acquisition financings in the Oil & Gas sector that we intend to replicate in the future”, he added.
