19 October 2013, Lagos – Oando Plc has received commitment letters for up $815 million of credit facilities from local and foreign banks to pay for the acquisition of ConocoPhillips’ (COP) Nigerian asset portfolio.
The purchase price for the assets is about $2 billion. Already the company has paid $435 million and with the availability of $815 million in credit, Oando has only $400 million to pay and conclude the transaction.
A statement from the company indicated that the $815 million credit is being arranged by three foreign banks and two Nigerian investment banking firms. The banks are BNP Paribas, Standard Bank and Standard Chartered Bank while the investment banking firms are FBN Capital and FCMB Markets.
Specifically, $465 million Reserve Based Lending (RBL) facilities are being arranged by BNP Paribas, Standard Bank and Standard Chartered Bank. On their part, FBN Capital and FCMB Markets are arranging a $350.0 million senior secured loan to complement the $465 million.
Market analysts said with the debt financing in place, a subsequent equity financing seems easier to manage and the timely completion of the transaction appears likely.
The acquisition of the assets is expected to be a transformational event for Oando, making it the largest indigenous exploration and production company in Nigeria. “With large annual cash-flow and guaranteed gas sales contracts in place, the assets seem to be self-sustaining even with a large degree of leverage,” an analyst said.
The Chief Executive Officer, Oando Energy Resource, Pade Durotoye, said the receipt of the commitment letters represents an important step towards closing the COP acquisition and concludes the second stage in their financing plan, having initially paid a $435 million deposit to COP.
“We have sought to optimally finance this acquisition to retain maximum value for our shareholders. We will now proceed to the final stage of concluding the financing required for completion of the COP Acquisition,” Durotoye said.