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   Market Date: 25-07-2014   
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16 Nigerian, Foreign Banks Raise $1.1b for Vmobile

Category: General


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16 Nigerian, Foreign Banks Raise $1.1b for Vmobile History was made in Nigeria’s financial sector yesterday as Vmobile Nigeria announced the completion of a $1.1 billion medium-term debt financing agreement with leading international banks and a consortium of 16 top Nigerian banks led by Zenith International Bank Plc, Guaranty Trust Bank Plc and First Bank of Nigeria Plc. Other financiers in the deal include Export Credit Agencies, multilateral institutions and equipment vendors and while the foreign banks raised $650 million, the local banks supported Vmobile with $450 million. The debt financing will be used to drive Vmobile’s aggressive network rollout and support the ongoing coverage expansion programme tagged, Project ROSE, across the country. Commenting on the deal, Chief Executive Officer of Vmobile, Mr. Willem Swart, said the financing is a major feat in the company’s rollout plans, and confirms international and local financiers’ confidence in the company’s operations. He added that the agreement also gives Vmobile access to finance to fund its five-year business plan adding that “In addition, the deal further reaffirms the increasing international confidence in Nigeria as a fast growing investment destination, and boosts foreign direct investment by more than $650 million”. “Overall, the financing is a block-buster in the history of project financing in Nigeria. Its significance is underscored by the fact that it is by every standard the biggest indigenous transaction in all the sectors of the Nigerian economy. Specifically, it is the biggest funding arrangement in Nigeria second only to one or two other transactions in the oil and gas sector”. In his remarks, Managing Director, Zenith Bank Plc, Mr. Jim Ovia, who said he is very proud that Zenith is one of the banks that made the facility a reality, assured Vmobile that it would continue to enjoy the best of financial services. “$1.1 billion is a huge amount of money. First of all, it is about may be 50 per cent - 60 per cent of the GDP of the United Kingdom and for this kind of figure to be put together by three Nigerian banks - First Bank, GTBank and Zenith, in terms of financial advisory service, it is very exciting. It is a very exciting moment for the three banks to work together, to collaborate as a team to offer what I will term one of the first financial engineering, one of the first financial advisory services that no other three Nigerian financial institutions could put together,” he said. Also, describing the deal as a land mark event in the history of financing in Nigeria, Managing Director, GTBank, Mr. Tayo Aderinokun, commended Vmobile for giving Nigerian banks the “opportunity to show that things like this can be done.” “This shows that Nigeria is starting to have corporations that have the capability to take this kind of debt. It also shows that really, we are moving and that things can only get better. Besides, it means that Nigerian financial institutions are now going into realms which a decade ago or two decade ago were totally unheard of,” he said. The financing deal, which is in two phases, is being provided by leading financial institutions in Nigeria, international financial institutions and reputable global GSM equipment vendors. During Phase 1, the company is to access over $700 million, with about $250 million provided by offshore banks and equipment vendors while in Phase 2 of the deal, offshore lenders will provide over $400 million. Already, about $200 million has been drawn down. Providing a breakdown of the funding agreement, Chief Treasury Officer, Vmobile, Ayo Gbeleyi, said “Vmobile concluded the negotiations and execution of its Global Finance Documents on September 16, 2005. “Offshore lenders include African Export and Import Bank (Afrex-Im), Standard Chartered Bank, Rand Merchant Bank, Barclays Bank, Nordea Bank AB and Ericsson Credit AB. “The consortium of 16 leading Nigerian banks/institution includes First Bank, Zenith Bank, GTBank, Afribank, Wema Bank, National Bank, Intercontinental Bank, UBA, Ecobank, Lead Bank, Access Bank and Oceanic International Bank. “Others are MBC International Bank, First City Monument Bank, EIB International Bank and Kakawa Discount House”. According to him, “Nordea Bank AB and Ericsson Credit AB facilities enjoy political risk insurance coverage from Swedish Export Credits Guarantee Board (EKN) and Multilateral Investment Guarantee Agency (MIGA), respectively. This is in addition to the Security Trust Deed which gives pari-passu interest in the assets of the company to existing and future senior lenders. “The local facility is unique in many notable respects. It is indeed a landmark and first of its kind for project finance with a straight tenor of six years in the annals of financing in Nigeria. It is also the largest club lending by size and up until recently, the maiden medium term financing in the local market”. - ThisDay

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