SAMPLE ENTRY FOR NIGERIAN LEGAL AWARDS
THE NIGERIAN LEGAL AWARDS ...celebrating the contributions of Nigerian lawyers to business
1900
PLOT 2, AYODELE FANOIKI STREET, MAGODO GRA PHASE 1, ISHERI,LAGOS
ESQ B. BANKING AND FINANCE TEAM OF THE YEAR Name of firm: ESQ Name of contact from firm: Aduni Bala Job title of contact: Partner, Finance Phone number of contact: +234 (0)80 *** **** Email of contact: adunibala@esq.com Description: ESQ advised Emmanuel OIL in connection with the financing of their acquisition of a 70 percent participating interest in Oil Mining Lease (OML) 300 and related facilities in the Northern Part of Nigeria from joint venture partners Bimbo Petroleum, Nkem Nigeria Limited, and Tayo Oil Company Limited as part of their divestments in line with the Nigerian Government’s initiative to increase and develop the active participation of Nigerian companies in the country’s upstream oil and gas business. The US$5 billion acquisition was financed in part by equity and in part by an inspired trade-backed US$700m six-year syndicated reserve-based lending (SRBL) arranged by Sarah bank, with James Trading, the Peace Finance Corporation and five Nigerian banks as lenders. ESQ had played an active role on this transaction including advising Emmanuel OIL on its bid for the target assets, the selection of Emmanuel OIL as the preferred bidder for the assets, the signing of the sale and purchase agreement and the financing for the acquisition. Our role included Due Diligence on asset, advice on regulatory regime, regulatory liaison and compliance, structuring alternatives to cash settlement escrow payments, satisfying conditions precedents & obtaining final regulatory approval. We have also continued to advise Emmanuel OIL in ongoing negotiations with the lenders towards the alteration of certain key financial terms of the SBRL and the security package for the transaction. This deal featured a novel Letter of Credit backed escrow arrangement, a six-year finance for a five year OML, and a bespoke insurance tool which was used to cover the risk of non-renewal of the OML by the Nigerian authorities for the last five years of the facility, thus improving the borrowing capacity. Deal Value: US$5 billion
a. Market context The deal was an innovative, complex and first-of-its-kind transaction, which involved the unusual use of Syndicated Reserve-Based financing techniques to support a term acquisition facility that provided six-year funding for the acquisition of an asset with an unexpired licence term of only five years. Innovative alternative solutions were required to be devised by us and other advisers on the transaction to get the lenders comfortable to assume the risk of non-renewal of the licence for the last two years of the six-year tenor of the facility. b. History of the client relationship Emmanuel OIL is an SPV made up of Leke Resources Limited, Margaret Oil and Gas Limited and South Oil and Gas Limited. We have represented the 3 individual companies in several engagements and in different capacities. c. Technical innovation A bespoke insurance tool was innovatively used to cover the risk of non-renewal of licence by the Nigerian authorities for the two-year period by which the facility exceeded the unexpired term of the licence. This unique instrument, which has not yet been used in the Nigerian market before now, enabled the borrower to improve the borrowing capacity of the oil assets while at the same time protecting lenders against the risk of non-renewal of the OML. Pending the receipt of the regulatory consent of the Minister of Petroleum Resources, which is required before the transfer of any oil asset in Nigeria and could typically take several months and sometimes years to obtain, thereby invariably increasing the financing costs of the buyer, we along with other advisers on the deal resorted to the use of a Standby Letter of Credit (SBLC) structure to backstop the buyer’s payment obligations to the Sellers. This SBLC structure potentially saved the borrower millions of dollars in interest payments that would have been incurred on the SRBL facility while the parties waited for the consent of the Minister of Petroleum. It also proved beneficial to the lenders as actual funding of the purchase price was delayed until the consent was received and the transaction proceeded to completion. This innovative structure is very likely to become a template for future financings of this sort in the Nigerian market. Another innovative feature was the use of a hedge mechanism which, by setting a minimum or floor price for the sale of crude oil for a fixed duration, provided Emmanuel OIL with protection from oil price volatility in its crude sale agreement with Leke oil Trading. The relevant negotiations were extremely challenging but were also critical since the repayment of the SRBL facility is dependent on the forward trade flows generated by the oil assets, and was therefore extremely vulnerable to downward movements in oil price. Given the significant crash in global oil prices since the completion of this transaction, this structure has proven extremely successful and prescient (if not prophetic) and the fixed, firm price offtake model that was utilised under
this structure is also very likely to be a reference point for similar transactions in the Nigerian market in future. Finally, in place of using expensive cash escrow and security arrangements as otherwise required under the terms of sale by the sellers, we were able on the transaction to substitute this with the SBLC structure already described and that way offer the sellers equal protection and comfort at a much cheaper cost to both the buyer and the lenders. d. Innovation in client service The innovative thinking required in delivering the various alternative solutions already described above and our careful, patient and painstaking collaboration with the client, the banks and other professional advisers on the deal structure brought tremendous satisfaction to our client on this deal. Every step we did not rest until we ensured that the client’s often difficult and sometimes unprecedented demands and transaction objectives were satisfactorily met. e. Innovation in pricing We used a number of risk sharing measures including: 1. A success Fee Element – The bulk of our fees were payable only upon success of the transaction. 2. Dead deal Discounts – In the event of failure to complete the transaction successfully, we would have forfeited the success fee element, while in addition offering a dead deal discount to the small portion that had already been earned and payable. As risky as the above pricing mechanisms were for us, they proved successful in the end and also gave client the comfort of knowing that we were fully committed and our interests were well aligned with theirs. f. Measurable outcomes The deal was extremely satisfactory to both the borrower and lender. It has also become a reference point for similar transactions in the Nigerian market in future. g. Any additional relevant information For further information on the deal, kindly visit the following links
2. A list of all major parties (individuals and firms) involved in the deal, including (where appropriate) key advisers, associates, partners, barristers and in-house counsel.
The team from ESQ included: Aduni Bala - Lead Partner, Finance and Projects Chukwuma Danjuma - Partner, Energy and Projects Eigbe Folarin - Partner, Dispute Resolution Gida House - Senior Associate, Finance Ini Jalingo - Associate, Energy and Projects Kaduna Layomi - Associate, Finance and Projects Other Firms involved in the transaction include: Deola LLP– Nigerian counsel to the Lenders Wigs & Gray – Borrower’s English counsel Riceday LLP – Lenders’ English counsel 3. Please provide details of five of the firm’s most valued deals in this category over the last five years. Other deals the team has worked on include Client: *** Value: US$*** million Details: The firm advised *** as borrower as well as its Nigerian entities as security providers on a US$*** million secured revolving reserves-based lending facility provided by a syndicate of lenders including **bank, **Bank plc, **bank and **Bank. It involves a US$** million loan facility (with an accordion feature enabling the facility amount to be increased to up to US$**** million) from a group of international and Nigerian banks for the funding of the development of the primary offshore asset reserves in Nigeria. Other firms involved in the deal include; ***LP (Lenders’ local counsel), ** Partners (Lenders’ English counsel), *** LLP (Borrower’s English counsel), *** (Lenders’ Dutch counsel) This is a novel transaction and the first time this was done in Africa as a whole. The deal won numerous international Awards including IFLR100 Best Deals 2014, James Bond Awards Best African Deal 2016, ESQ Awards Finance Deal 2015, etc. Client: *** Value: US$*** million Details: The firm advised *** as borrower as well as its Nigerian entities as security providers on a US$*** million secured revolving reserves-based lending facility provided by a syndicate of lenders including **bank, **Bank plc, **bank and **Bank. It involves a US$** million loan facility (with an accordion feature enabling the facility amount to be increased to up to US$**** million) from a group of international and Nigerian banks for the funding of the development of the primary offshore asset reserves in Nigeria. Other firms involved in the deal include; ***LP (Lenders’ local counsel), ** Partners (Lenders’ English counsel), *** LLP (Borrower’s English counsel), *** (Lenders’ Dutch counsel)
This is a novel transaction and the first time this was done in Africa as a whole. The deal won numerous international Awards including IFLR100 Best Deals 2014, James Bond Awards Best African Deal 2016, ESQ Awards Finance Deal 2015, etc. Client: *** Value: US$*** million Details: The firm advised *** as borrower as well as its Nigerian entities as security providers on a US$*** million secured revolving reserves-based lending facility provided by a syndicate of lenders including **bank, **Bank plc, **bank and **Bank. It involves a US$** million loan facility (with an accordion feature enabling the facility amount to be increased to up to US$**** million) from a group of international and Nigerian banks for the funding of the development of the primary offshore asset reserves in Nigeria. Other firms involved in the deal include; ***LP (Lenders’ local counsel), ** Partners (Lenders’ English counsel), *** LLP (Borrower’s English counsel), *** (Lenders’ Dutch counsel) This is a novel transaction and the first time this was done in Africa as a whole. The deal won numerous international Awards including IFLR100 Best Deals 2014, James Bond Awards Best African Deal 2016, ESQ Awards Finance Deal 2015, etc. Client: *** Value: US$*** million Details: The firm advised *** as borrower as well as its Nigerian entities as security providers on a US$*** million secured revolving reserves-based lending facility provided by a syndicate of lenders including **bank, **Bank plc, **bank and **Bank. It involves a US$** million loan facility (with an accordion feature enabling the facility amount to be increased to up to US$**** million) from a group of international and Nigerian banks for the funding of the development of the primary offshore asset reserves in Nigeria. Other firms involved in the deal include; ***LP (Lenders’ local counsel), ** Partners (Lenders’ English counsel), *** LLP (Borrower’s English counsel), *** (Lenders’ Dutch counsel) This is a novel transaction and the first time this was done in Africa as a whole. The deal won numerous international Awards including IFLR100 Best Deals 2014, James Bond Awards Best African Deal 2016, ESQ Awards Finance Deal 2015, etc. Client: *** Value: US$*** million Details: The firm advised *** as borrower as well as its Nigerian entities as security providers on a US$*** million secured revolving reserves-based lending facility provided by a syndicate of lenders including **bank, **Bank plc, **bank and **Bank. It involves a US$** million loan facility (with an accordion feature enabling the facility amount to be increased to up to US$**** million) from a group of international and Nigerian banks for the funding of the development of the primary offshore asset reserves in Nigeria. Other firms involved in the deal include; ***LP (Lenders’ local counsel), ** Partners (Lenders’ English counsel), *** LLP (Borrower’s English counsel), *** (Lenders’ Dutch counsel)
This is a novel transaction and the first time this was done in Africa as a whole. The deal won numerous international Awards including IFLR100 Best Deals 2014, James Bond Awards Best African Deal 2016, ESQ Awards Finance Deal 2015, etc. 4. Supporting evidence of the team’s performance over the year, including details of: a. Innovation in pricing and service delivery Please refer to examples already provided in relation to the Emmanuel Oil financing as well as other transactions discussed above. b. Client wins Nigeria *** Authority (managers of the Nigeria *** Fund) and James Bond Investments International (as project sponsors) together with their project SPV in connection with the financing of the US$** billion construction of the ********* project on a PPP BOT concession basis. (This appointment was stiffly competed. We went up against and proudly beat 7 of the other topmost Nigerian law firms to win the role).
** Bank plc, UIGMC and ****PLC as creditors on the N** billion restructuring and refinancing of the **** Power group of companies
*** Investment on the financing of a proposed acquisition of a stake in ***Nigeria Limited
c. Financial performance The firm witnessed a year-on-year revenue growth of 45 percent during the period under review, an outstanding performance in a period that saw significant cuts in the cost of legal services among corporates globally as well as global oil prices crash significantly, with knock-on effects on the economic activities in Nigeria. d. Outcomes – what does your work mean to the clients you serve Our outstanding performance on the Emmanuel OIL and other financings has resulted in commendations and repeat appointments from our clients, including in the form of on-going advice on additional financing being provided to Emmanuel OIL. e. Precedents set We contributed in crafting the Emmanuel OIL financing which set a number of precedents (as described above) including the provision of debt funding for the acquisition of a licence-based asset with a loan tenor longer than the life of the licence, as well as providing the lenders sufficient comfort to make this the first reserves-based financing in Nigeria concluded without there being a Competent Persons Report on the relevant reserves.