'Commercial Deal of the Year' Awarded to Trico Capital International By Trade & Forfaiting Review for $1 Billion Eroton/Shell Acquisition


LONDON (October 22nd, 2015) - Trico Capital International, a specialist financial advisory practice for sustainable, private enterprise, infrastructure and self-financing projects in West Africa, is celebrating its award-winning deal to support Nigerian company Eroton acquiring the Shell Oil Mining Lease 18 (OML18) - one of Nigeria's most prolific oil-producing assets, with possibly its largest natural gas reserves, critical to growing Nigeria's existing fertilizer petrochemical industrialization and power generation infrastructure.

How did they do it? Trico Capital, led by founding Executive Chairman Austine Ometoruwa, proactively put together the financing structure and plan under a groundbreaking combination of a syndicated reserve-based lending facility (SRBL) and a letter of credit (LC) by Afreximbank, financed through debt and equity with the participation of Standard Chartered as escrow agent.

Trico Capital acted as the exclusive financial advisory manager for the transaction and, using its original, compelling term sheet and financial model for the RBL financing structure, managed the selection of arranging international banks. This culminated in the appointment of Afreximbank as the lead bank, along with a number of other African banks as joint arrangers, for the $1.2 billion deal, which saw Eroton take control of OML18.

The unique RBL acquisition financing structure had two key groundbreaking proactive elements: (i) an International Forward fixed crude oil price hedge embedded in the Shell offtake structure, which delivered a $95-per-barrel forward-fixed price for 3 years from January 2015 - January 2018; and (ii) a landmark UK Lloyd insurance policy covering the risk of non-renewal of the OML18 lease by the Nigerian government. Both proactive structuring elements became incredibly valuable after financial close following the collapse of international oil market prices and new elections that resulted in a change of government in Nigeria.

The complexity and groundbreaking significance of the deal was recognised by Trade & Forfaiting Review this year when it included it as one its 2014 Commercial Deals of the Year. The judges noted its "inspired use of a syndicated reserve-based lending facility" in presenting the award.

"This particular deal required complex escrow and security arrangements to ensure the asset was secured and the repayment mechanism was put in place before the lenders finally released the funds," the judges wrote. "It won marks for innovation and structuring."

The landmark deal is further proof of the growing importance and success of well-structured international financing investments into African infrastructure. Kofi Annan, former United Nations Secretary-General, argued in a recent report from the Africa Progress Panel that "Africa needs to utilize all of its energy assets in the short term, while building the foundations for a competitive, low-carbon energy infrastructure," echoing Trico Capital's approach to infrastructure financing.

He added: "Africa is well positioned to expand the power generation needed to drive growth, deliver energy for all and play a leadership role in the crucial climate change negotiations."

About Trico Capital International:
Trico Capital International is a specialist financial advisory practice developing a pipeline of infrastructure projects and financing solutions in sub-Saharan Africa, particularly West Africa. With offices in London, Lagos and Cairo, the company works closely with a network of financial institutions and UK businesses to identify, select, screen, and then actively participate in those transactions and projects that meet our key criteria of sustainability, building capacity, and acting as catalysts for further economic activity and investment.

About Austine Ometoruwa:
Austine Ometoruwa is Chairman of Trico Capital International, and formerly Citibank's Africa Investment Bank Head and Pioneer President of the Africa Finance Corporation (AFC), Africa's first development financial international institution, which is based in Lagos. He founded Trico Capital International in 2009 to provide a financial advisory and infrastructure/natural resources platform for purely African development, focusing on sustainable projects that respond to and solve African problems, leveraging African resources.

Back to News