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Debt Conversion Agreement

Debt Conversion Agreement Template for Nigeria

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Key Requirements PROMPT example:

Debt Conversion Agreement

"I need a Debt Conversion Agreement under Nigerian law for converting a $5 million bank loan into preferred shares of our manufacturing company, with the conversion to be completed by March 2025 and including anti-dilution provisions."

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Document background
The Debt Conversion Agreement is a crucial instrument in Nigerian corporate finance, used when companies seek to restructure their debt obligations by converting them into equity or other securities. This document becomes relevant in scenarios such as corporate restructuring, financial distress management, or strategic balance sheet optimization. The agreement must comply with Nigerian legislation, including the Companies and Allied Matters Act (CAMA) 2020, Investment and Securities Act 2007, and relevant Central Bank of Nigeria regulations. It typically includes detailed provisions on conversion mechanisms, valuation methods, regulatory compliance requirements, and implementation procedures. The document is particularly important in the current Nigerian business environment where companies increasingly seek alternative means of debt restructuring and capital reorganization.
Suggested Sections

1. Parties: Identification of the debtor, creditor, and any other relevant parties to the agreement

2. Background: Recitals explaining the existing debt arrangement and the parties' intention to convert the debt

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Acknowledgment of Existing Debt: Confirmation of the outstanding debt amount and its validity

5. Conversion Terms: Details of the conversion mechanism, including conversion price, ratio, and resulting equity/securities

6. Conditions Precedent: Prerequisites that must be satisfied before the conversion can take effect

7. Implementation of Conversion: Process and procedures for executing the conversion

8. Representations and Warranties: Statements of fact and assurances from both parties

9. Regulatory Compliance: Commitments to comply with relevant laws and regulations

10. Tax Provisions: Allocation of tax responsibilities and implications of the conversion

11. Termination: Circumstances under which the agreement may be terminated

12. Governing Law and Jurisdiction: Specification of Nigerian law as governing law and jurisdiction for disputes

13. Notices: Process for formal communications between parties

14. General Provisions: Standard boilerplate clauses including amendments, waivers, and severability

Optional Sections

1. Foreign Exchange Provisions: Required when the debt involves foreign currency or international parties

2. Security Arrangements: Needed if any security or collateral is involved in the conversion process

3. Shareholder Approval: Required when the conversion requires shareholder approval under CAMA

4. Registration Rights: Necessary when the conversion involves issuance of registered securities

5. Board Approval Process: Required when specific corporate governance procedures need to be followed

6. Anti-dilution Provisions: Optional protection for the creditor against future dilution of converted equity

7. Step-In Rights: Optional rights for the creditor to participate in management post-conversion

Suggested Schedules

1. Schedule 1 - Existing Debt Details: Detailed breakdown of the existing debt, including principal, interest, and any other charges

2. Schedule 2 - Conversion Calculations: Detailed methodology and examples of conversion calculations

3. Schedule 3 - Form of Conversion Notice: Template for the formal notice triggering the conversion

4. Schedule 4 - Required Corporate Authorizations: List of required approvals and resolutions

5. Schedule 5 - Form of Share Certificate: Template for share certificates to be issued upon conversion

6. Appendix A - Regulatory Approvals: List of required regulatory approvals and their status

7. Appendix B - Timeline for Conversion: Detailed implementation timeline and milestone dates

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 | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Business Day
CAMA
Completion
Completion Date
Conditions Precedent
Conversion
Conversion Date
Conversion Notice
Conversion Price
Conversion Ratio
Conversion Shares
Corporate Authorizations
Creditor
Debt
Debt Documents
Default
Effective Date
Encumbrance
Event of Default
Existing Debt
Financial Indebtedness
Financial Year
Governmental Authority
Implementation Steps
Interest
Law
Liabilities
Long Stop Date
Material Adverse Effect
New Shares
Nigerian Law
Outstanding Amount
Parties
Principal Amount
Regulatory Approvals
Regulatory Authority
Related Party
Relevant Securities
Representatives
SEC
Security
Security Documents
Share Capital
Shareholder Approval
Shares
Subsidiary
Tax
Transaction Documents
Warranties
Relevant Industries

Banking & Financial Services

Manufacturing

Oil & Gas

Real Estate

Infrastructure

Telecommunications

Mining

Agriculture

Construction

Retail & Consumer Goods

Relevant Teams

Legal

Finance

Treasury

Corporate Secretariat

Risk Management

Compliance

Corporate Finance

Board Secretariat

Executive Management

Investor Relations

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Secretary

Treasury Manager

Financial Controller

Restructuring Officer

Investment Banker

Corporate Finance Manager

Risk Manager

Compliance Officer

Managing Director

Chief Executive Officer

Board Director

Finance Manager

Industries
Companies and Allied Matters Act (CAMA) 2020: Primary legislation governing company operations in Nigeria, including share capital modification, issuance of new shares, and corporate restructuring
Investment and Securities Act 2007: Regulates securities trading and investments, relevant for debt-to-equity conversion mechanisms and compliance requirements
Central Bank of Nigeria Act 2007: Governs banking and financial transactions in Nigeria, including debt restructuring and conversion arrangements
Companies Income Tax Act (CITA): Addresses tax implications of debt conversion, including potential tax liabilities or benefits arising from the transaction
Foreign Exchange (Monitoring and Miscellaneous Provisions) Act: Relevant if the debt conversion involves foreign currency or international parties, governing foreign exchange transactions
Nigerian Investment Promotion Commission Act: Applicable if the debt conversion involves foreign investors or results in changes to foreign ownership structure
Banks and Other Financial Institutions Act (BOFIA): Relevant if the debt conversion involves banking institutions or financial intermediaries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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