NIGERIA Trends and Developments Contributed by: Ozioma Agu, David Olajide and Onyinyechi Isikaku, Stren & Blan Partners
Stren & Blan Partners 3 Theophilus Oji Street Lekki Phase 1 Lagos 106104 Lagos State Nigeria Tel: +234 816 268 5703 Email: OziomaAgu@strenandblan.com Web: www.strenandblan.com
The rationale for intercreditor arrangements An ICA serves as the backbone of syndicated and multi-tranche financing structures. Its core function is to clearly define and govern the relationships, rights, and obligations of the various creditors financing the same borrower. This is particularly critical in Nige- ria, where projects frequently involve both local and international lenders, each operating under different regulatory regimes and market expectations. Without a robust ICA, multi-lender transactions risk unrav- elling into disputes over priority of claims, enforce- ment mechanics, and asset realisation, particularly in instances of borrower default or insolvency. By establishing a transparent framework for decision- making, security enforcement, and proceeds distribu- tion, ICAs not only mitigate potential conflicts but also provide the predictability and stability necessary for the successful execution of complex financings. In a market as dynamic as Nigeria’s, they are indispen- sable instruments for aligning creditor interests and safeguarding the integrity of high-value transactions. In multi-lender transactions, the absence of a clearly defined intercreditor framework creates uncertainty and litigation risks. Intercreditor arrangements regu- late the relationships between lenders, providing clar- ity on: • priority of payments: determining how proceeds are applied to different classes of lenders; • enforcement rights: preventing unilateral enforce- ment by one lender to the detriment of others;
Structuring Syndicated Loans in Nigeria: Building Robust Intercreditor Arrangements for Effective Risk Sharing, Security and Enforcement Introduction In Nigeria, the landscape of large-scale financing has changed significantly. Transactions once dominated by government institutions, such as infrastructure projects, oil and gas developments, and major syndi- cated corporate loans, are now increasingly financed through a mix of private equity investors, develop- ment finance institutions, and commercial banks. This reflects the growing need for capital-intensive funding and the wider participation of diverse stakeholders in the Nigerian financial market. Syndicated lending has become a key feature of this market, particularly in infrastructure, energy, manufac- turing, and natural resources. These transactions typi- cally require the participation of multiple lenders, each with different risk appetites, capital contributions, and commercial objectives. While this expands access to capital, it also introduces complexity. A single deal often brings together creditors with divergent inter- ests, creating the potential for disputes if not properly managed. The central challenge is not just raising funds but aligning lenders and managing lender-on-lender risk. This is where the intercreditor agreement (ICA) becomes essential. The ICA sets out the rights, obli- gations, and decision-making processes among lend- ers. It provides clarity on issues such as priority of claims, enforcement rights, and the sharing of pro- ceeds, which are critical in circumstances of default or insolvency.
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