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Three Nigerian firms top trade finance deals with N64.5billion

By Godwin Oritse

THREE Nigerian firms namely: Slok Nigeria Limited, Minaj Holdings and Arik Airlines Limited have topped trade financing deals totaling N64.5billion facilitated by Union Bank of Nigeria and Diamond Bank Plc.
The deals which have been described as excellent will see Slok Nigeria Limited acquiring eight brand new vessels from a Malaysian Ship yard, while Minaj Holdings will use its facility to construct a new cement factory with a capacity of 1,200 tons of cement per day as against Arik’s plans to acquire a new S340-500 airbus and three other Boeing 737-700 aircraft.
While Slok’s deal was put at about N40 billion, that of Minaj stood at N15 billion and that of Arik was put at N9 billion.

According to the March edition of Trade Finance magazine, Slok’s financing will split between four tranches of $60 and the deal makes it stand out for its sheer size of the transaction for the Nigerian market.
In addition to being a flexible financing for an established Nigerian firm, the deal will contribute significantly to the development of the Federal Government’s policy on local content thereby generating jobs and having a positive impact on the local economy.

For Minaj Holdings, the cement manufacturing plant will be constructed by the Chinese National Electric Equipment Corporation in Nike, Enugu State and will produce 500 tons of cement per annum .
Coal, the magazine stated, will be used to fire the furnace while the waste from the coal wich is ash will also be mixed with clay to produce bricks and is to be the immediate spin off of the plant.
It would be recalled that Minaj was one of the companies that got approval from the Federal Government in 2008 to participate in the cement industry with a view to crashing the price of the commodity that has skyrocketed over the years.

Moreover, this deal is also part of the deeper economic relationship between Nigeria and China just as the Chinese Government has concluded plans to invest $50 million to develop infrastructure in Nigeria through Sinosure.
For Arik, the $106 million bridge financing for the airline, a privately owned Nigerian company, was arranged by HSBC and African Export-Import Bank and stands as the biggest bridge financing for an ECA covered transaction to date in Nigeria.

The magazine also reported that the airline required the funding as part of its general fleet expansion plan.
The timing was said to be critical as the airline needed to import at least three planes before its peak season in December- January when it had planned to launch its international fight from Lagos to London as well as its new West African regional route.
In the deal, Union Bank of Nigeria Plc issued LCs that were confirmed by HSBC and Afeximbank in favour of the aircraft suppliers.

The LCs were re-financed up to six months from the LC confirmation date to provide adequate time for the ECA-backed loan arranged by HSBC to be concluded and made available for drawing down.
The deal involved considerable risk as the institutions would be funding the full amount in the event that the ECA funding did not materialize as envisaged.

The ECAs involved needed  to confirm their approval of cover before the LCs   could be issued, a development that did not translate into a firm guarantee that the deal would automatically occur.


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