September 24, 2018

Municipality Waste Management Contractors Limited

Municipality Waste Management Contractors Limited.

₦20,321,000,000 18.00% Series 1 Secured Fixed Rate Medium Term Notes due 2022.

Deal Description:

The Lagos State government through the State’s Ministry of Environment launched the Cleaner Lagos Initiative (“CLI”) in 2016. The CLI entails a review and consolidation of environmental policies including the State’s waste management system to provide for sustainable and economically viable methods waste management through Private Public Partnership backed by the Environmental Management and Protection Law.

Visionscape Consortium was appointed the preferred bidder and awarded a 10 year concession on the back of which the Consortium sought the issuance of Medium Term Notes to finance acquisition of waste management infrastructure. As Joint Issuing house/Arranger, FBNQuest Merchant Bank Limited advised on structuring the Notes and documentation to establish the programme. Investor forum was held in Lagos and Abuja, with follow on one-on-one meetings and calls to provide clarification to investors

The Cleaner Lagos Initiative required the Contractors to deploy and manage waste collection, treatment and disposal infrastructure within the State for a period of 10 years, while monthly service fee will be paid to the Contractors over the service period. In view of the substantial level of private financing required to implement the new waste management system under the CLI, the State supported the contractor’s access to funds by issuing an Irrevocable Standing Payment Order (“ISPO”) on the State’s revenue account upon which the funding vehicle issued a Project Bond.

Given the novelty of the structure, and issuance method by private placement, the Arrangers engaged the National Pension Commission to acknowledge compliance with its investment guidelines without which the Pension Funds Administrators would not be able to invest. A road show was organised to engage in one-on-one discussions with Pension Fund Administrators and Asset Managers in Lagos and Abuja, and while also maintaining telephone conversation with investors to provide clarifications and required information.

Despite tight monetary conditions, the N20.321 billion Series 1 Notes were successfully distributed to a diversified mix of investors which included Pension Fund Administrators (PFAs), High Networth Individuals/Family Offices, Asset Managers and Trustees, and Deposit Money Banks.