Banks ‘ready to fund Brittania-U’s acquisition of Chevron assets’

Chevron_Logo31 October 2013, Lagos – With the emergence of Brittania-U Nigeria Limited as the winner of the bids for three Chevron oil blocks, it has been reliably gathered that three banks – First Bank Nigeria Limited, Diamond Bank Plc and Ecobank Plc – have communicated to the US oil multinational of their preparedness and commitment to fund the acquisition of the oil acreages through syndication.

According to sources, the three banks have written to Chevron and its banker, BNP Paribas, of their commitment and preparedness to fund the entire amount of $1.4 billion, being 85% balance of Brittania-U’s bid for the Chevron assets.

According to information gathered, Brittania-U had earlier deposited 15% amounting to $250 million of its bid price with Chevron/BNP Paribas, as one of the key conditions of the bid.

In the letter jointly signed by the chief executives of the three banks captioned “Request for Bank Board Commitment in Support of Brittania-U Nigeria Limited’s Bid for 40% Equity Interest of Chevron Nigeria Limited in OMLS 52, 53 and 55 in Nigeria”, the banks confirmed their commitment to jointly syndicate the bid amount of $1.4 billion and noted that Brittania-U Nigeria Limited has been their upstream client of repute with a transactional relationship period ranging from three to five years and is one of their most valued customers.

In the said letter, the three banks stated that board meetings would soon be convened by the individual syndicating bank to give firm approval for their respective commitments to funding the acquisition.

The letter further stated that the “syndication banks through the Joint Lead Arrangers – FBN, Ecobank and Diamond Bank – have put together a syndication team to provide the said amount.

“However, the banks need to convene board meetings to give firm approval for their individual commitments.”

The bank executives stated that after their individual bank commitments, the banks would provide a joint commitment letter to Chevron.

From the information, it is clear that Brittania-U, which posted the highest bid for the assets, is yet to be officially contacted by BNP Paribas or Chevron on their status vis-à-vis the bid result.

Sources said this conduct falls short of standards expected from a reputable company such as Chevron.

“No one will expect any company, not even a multinational, to provide board approved firm commitment to fund a transaction of such magnitude without any tangible evidence (an award letter) of the transaction they are to fund.

“This is despite the fact that Brittania-U and their bankers have been requesting from Chevron and BNP Paribas,” explained a source conversant with the bids.

Till date, he explained, Brittania-U had not been declared as the bid winner of the asset sale, whereas the losers have been so notified.

– Ejiofor Alike, This Day

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