Atlas Mara Limited, the major investor in Union Bank of Nigeria, said has reached agreement in principle for a $40M Debt Facility.
The company said in a disclosure that the New Debt Facility will replace the convertible bond issued to Fairfax Africa Holdings Corporation the Company’s largest shareholder, as previously announced on April 24, 2018. Completion of the New Debt Facility remains subject to customary conditions for transactions of this nature.
John Staley, Chief Executive Officer, said, “We are pleased to announce this new financing, which is a strong indication of investor interest and support from our existing shareholders and the broader market. The funding will enable investments to boost our IT and banking capabilities and support business operations.”
Proceeds will be used for general corporate purposes including replacing the April Convertible, strengthening the Company’s digital finance platform and supporting broader business growth and operations.
The New Debt Facility will have a three-year term maturing in or around July 2021, have an average annualized cost of debt of approximately 10.5%, and is secured by a portion of the Company’s indirect shareholding in Union Bank of Nigeria. The New Debt Facility includes the issuance of 12,400,000 detachable warrants (once the New Debt Facility is fully drawn) that on exercise each allow the holder to subscribe for one ordinary share of the Company at an initial strike price of $3.20 that is subject to adjustment in accordance with customary anti-dilution provisions.
The company said that the issuance of the detachable warrants is subject to shareholder approval at the Company’s Annual General Shareholder Meeting.