A Review of the Nigerian Energy Industry

Oando executes loan agreements to acquire ConocoPhillips Assets

Oando-Energy-Resources03 February 2014, Lagos – Oando Energy Resources Inc., a subsidiary of Oando Plc, which is focused on oil and gas exploration and production in Nigeria, has entered into two financial deals to raise a total of $800 million to partly fund its acquisition of the upstream oil and gas business of ConocoPhillips.

The company, in a statement Sunday, said the remainder of the funds would be used to refinance other existing debt within the Oando Energy Resources group.
According to the statement, the company will be raising $350 million corporate facility agreement through a syndicate of Nigerian lenders.

Under the deal, FBN Capital Limited and FCMB Capital Markets Limited, will serve as mandated lead arrangers; FBN Capital Limited as facility agent and financial modelling bank while FCMB Capital Markets Limited will be the technical bank and First Trustees Nigeria Limited the security trustee.

The corporate facility, it said, would bear interest at an annual rate of LIBOR plus 9.5 per cent for the first 57 months following the date of first drawdown and LIBOR plus 10.5 per cent thereafter until the final maturity date of 72 months following the date of the first drawdown.

The facility is an amortising loan, with interest and principal payable quarterly from the date of first drawdown until maturity.

The company is also raising another $450 million senior secured facility agreement arranged by a group of Nigerian and international banks, including Standard Chartered Bank, BNP Paribas and The Standard Bank of South Africa Limited with Standard Chartered Bank acting as facility agent and security agent (the “RBL”).

The statement explained that the RBL would amortise  quarterly from the first utilisation date with a final repayment date of the earlier of the “Reserve Tail Date” (as defined in the RBL) and June 30, 2019.

Interest is payable quarterly from the first utilisation date at an annual rate of LIBOR plus 8.5 per cent.
The company said its obligations under the corporate facility were guaranteed by certain of its subsidiaries and affiliates.

“The obligations of the company under the corporate facility will be secured by:
•fixed and floating charges over the assets of the company and certain of its affiliates;
•fixed charges over the shares of certain subsidiaries and affiliates of the company; and
•a second ranking charge over the shares of an indirect wholly-owned subsidiary of the company (“Acquisitionco”) which will acquire the shares of one of the companies pursuant to the acquisition (as defined below).

“Proceeds from the corporate facility are intended to be used partially for payment of a portion of the purchase price in respect of the proposed acquisition by Oando Energy Resources of the Nigerian upstream oil and gas business of ConocoPhillips (the “Acquisition”) with the remainder to be used to refinance other existing debt within the Oando Energy Resources group.

“The borrower under the RBL is Acquisitionco and its obligations under the RBL are guaranteed by Oando Energy Resources, with the guarantee being subordinated to the corporate facility. The obligations of Acquisitionco under the RBL will be secured by fixed and floating charges over the shares and assets of Acquisitionco.

“Proceeds from the RBL are intended to be used to fund a portion of the purchase price for the acquisition.

The corporate facility and RBL remain subject to certain conditions precedent to drawdown.

“Closing of the ConocoPhillips Acquisition remains subject to satisfaction of closing conditions, including the anticipated consent of the Minister of Petroleum Resources in Nigeria,”  the statement said.

 

– Chika Amanze-Nwachuku, This Day

 

 

 

 

 

 

 

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