Case 10Working capital financing in Nigeria
Structuring a working capital facility for a Nigerian business.
Working capital is the money a business runs on. Our client needed a facility that would fund day-to-day operations without tying up the assets it relies on to grow.
- Client
- Nigerian operating company (confidential)
- Sector
- Corporate finance
- Practice
- Banking & Finance
- Jurisdiction
- Nigeria
The brief
Our client required a working capital facility to finance inventory, receivables and day-to-day operations. The facility had to be flexible enough to draw and repay as the business cycle demanded.
The real negotiation was over security and covenants: what the lender would take, and what room the business would keep to operate and borrow elsewhere.
Our advice
- 01
Facility agreement
Reviewing and negotiating the facility agreement, including drawdown mechanics, pricing, repayment and events of default.
- 02
Security package
Advising on the security to be granted, including charges over receivables and inventory, and limiting it to what the facility genuinely required.
- 03
Perfection and registration
Registering the security with the Corporate Affairs Commission and on the National Collateral Registry, and attending to stamping.
- 04
Covenants
Negotiating financial and operating covenants the business could meet in practice.
- 05
Conditions precedent
Preparing board approvals, legal opinions and other conditions precedent to first drawdown.
Outcome
The client secured a working capital facility on terms that matched its operating cycle, with security and covenants it had negotiated rather than simply accepted.