Facilities Agreement for Nigeria

Facilities Agreement Template for Nigeria

A comprehensive financing agreement governed by Nigerian law that establishes the terms and conditions under which a lender (typically a bank or financial institution) provides credit facilities to a borrower. The agreement incorporates specific requirements of Nigerian banking regulations, including Central Bank of Nigeria directives, and addresses local security registration requirements. It covers crucial elements such as facility amount, purpose, drawdown conditions, repayment terms, security package, representations, warranties, and covenants, all structured to comply with Nigerian legal requirements and market practice.

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What is a Facilities Agreement?

A Facilities Agreement under Nigerian law is the primary document used to establish and govern lending relationships between financial institutions and borrowers in Nigeria. This document is essential for any significant corporate lending transaction, project financing, or structured finance arrangement in Nigeria. It must comply with the Banks and Other Financial Institutions Act (BOFIA) 2020, Central Bank of Nigeria regulations, and other relevant Nigerian legislation. The agreement typically details the facility amount, purpose, conditions for drawdown, repayment structure, security arrangements, and various covenants and undertakings. It's particularly important that the Facilities Agreement addresses specific Nigerian requirements such as stamp duty obligations, corporate authorization requirements, and where applicable, foreign exchange regulations.

What sections should be included in a Facilities Agreement?

1. Parties: Identification of the lender(s), borrower(s), and any guarantors or security providers

2. Background: Context of the facility, purpose, and basic commercial terms

3. Definitions and Interpretation: Defined terms, interpretation rules, and Nigerian law-specific definitions

4. The Facility: Detailed terms of the facility, commitment amounts, purpose, and availability

5. Conditions Precedent: Documents and conditions required before drawdown, including Nigerian regulatory requirements

6. Drawdown: Process and mechanics for utilization of the facility

7. Repayment and Prepayment: Terms for scheduled repayments and voluntary/mandatory prepayments

8. Interest: Interest calculation, periods, default interest, and compliance with Nigerian usury laws

9. Fees: Commitment fees, arrangement fees, and other charges

10. Tax Gross Up and Indemnities: Tax provisions including Nigerian withholding tax requirements

11. Representations and Warranties: Standard and Nigeria-specific representations

12. Information Undertakings: Financial and other information to be provided by the borrower

13. General Undertakings: Positive and negative covenants, including local regulatory compliance

14. Events of Default: Default triggers and consequences

15. Changes to Parties: Assignment and transfer provisions

16. Payment Mechanics: Payment provisions including currency and payment systems

17. Set-off: Rights of set-off and their exercise

18. Notices: Communication methods and addresses

19. Calculations and Certificates: Basis of calculations and evidence of amounts due

20. Governing Law and Enforcement: Nigerian law as governing law and enforcement provisions

What sections are optional to include in a Facilities Agreement?

1. Security: Required if the facility is secured, detailing security package and enforcement

2. Guarantee: Required if there are guarantors, including guarantee provisions

3. Increased Costs: Used for syndicated facilities or where regulatory changes might affect costs

4. Market Disruption: Required for LIBOR/SOFR based facilities or syndicated loans

5. Anti-corruption Provisions: Extended provisions for international lenders or high-risk sectors

6. Currency Provisions: Required if facility involves foreign currency or exchange rate considerations

7. Majority Lenders: Required for syndicated facilities, defining voting rights

8. Agency Provisions: Required for syndicated facilities with an agent bank

9. Environmental Compliance: Required for project finance or environmentally sensitive sectors

10. Islamic Finance Provisions: Required if the facility needs to be Sharia-compliant

What schedules should be included in a Facilities Agreement?

1. Conditions Precedent: Detailed list of required documents and conditions

2. Form of Drawdown Request: Template for borrower to request utilization

3. Form of Transfer Certificate: Template for transferring commitments (syndicated facilities)

4. Repayment Schedule: Detailed repayment dates and amounts

5. Form of Compliance Certificate: Template for periodic compliance certification

6. Form of Security Documents: Forms of required security documents under Nigerian law

7. Disclosure Schedule: Borrower's disclosures against representations

8. Permitted Security: List of pre-approved security interests

9. Form of Accession Deed: Template for additional parties joining the agreement

10. Financial Covenants Calculations: Detailed methodology for financial covenant calculations

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Nigeria

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use

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