Milost Global Inc., a New York-based private-equity firm, has halted plans to provide $1 billion to Nigeria’s Unity Bank Plc after it received threats that it will be run out of the country if the deal continues.
The firm had agreed to provide debt and equity on the understanding that Unity would terminate its Nigerian listing to trade its stock in the U.S., Milost said in an emailed statement on Monday, according to Bloomberg.
The term sheet was signed and approved by the board of Unity, which needed the capital to build its buffers and to expand, the firm said. It would ultimately have acquired 60 percent in the Lagos-based bank.
“Milost started receiving threatening emails from a gentleman who says he is politically connected to the powers that could shut Milost out of Nigeria if Milost didn’t terminate the Unity Bank transaction,” after news of the deal went around the media and reported by Businessamlive, the private-equity firm said.
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Negative articles started appearing in the local press and last week, Unity issued a “false statement which denied signing a binding commitment agreement,” Milost said.
Unity didn’t immediately respond to requests for comment.
Unity, which was formed out of the merger of nine banks between December 2005 and March 2006, said in April last year that it is in talks to sell its non-performing loans to avoid penalties after missing a deadline set by regulators on its recapitalization plans. Some small- and mid-sized Nigerian lenders are battling to rebuild capital levels after a slump in oil prices triggered a foreign-currency shortage and a contraction in the country’s economy in 2016 made it difficult for businesses to repay loans
Milost, which has $25 billion in committed capital, will focus on its other investments in Nigeria, Chief Executive Officer Kim Freeman said in the statement, distributed by Globe Wire. The firm will soon release $21 million to oil-services company Japaul Oil & Maritime Services Plc and another $10 million to Resort Savings & Loans Plc.
The private-equity firm has said it is targeting companies that trade at less than half of their intrinsic value using a facility combining debt and equity that it calls the Milost Equity Subscription Agreement.
Milost buys shares of companies at a minimum 50 percent premium to their market value and then pegs the price over the next 90 days. If the securities fail to exceed this threshold, the target company will pay the difference to Milost in the form of extra stock, and a penalty of 10 percent to 20 percent of the discount that the share is trading at over a five-day period.
Milost said its agreement with Unity was executed on Nov. 14.
Frontpage February 13, 2021