In one of the most significant cross-border financings involving Brazil’s offshore energy sector this year, Milbank, Tweed, Hadley & McCloy LLP has represented a consortium of major international lenders providing a US$692 million debt facility for the purchase of the Black Diamond I deepwater drillship by Schahin Group.
The Brazilian energy and construction conglomerate is purchasing the drillship – to be built by Korea’s Samsung Heavy Industries – and will then charter it to Brazil’s Petrobras (Petróleo Brasileiro SA). Schahin Group has also entered into an operating agreement with Petrobras. Milbank advised joint lead arrangers The Export-Import Bank of Korea (Kexim), Mizuho Corporate Bank, WestLB AG and Standard Chartered Bank – along with a group of five other lenders from Europe and Asia.
A series of recent offshore discoveries by Petrobras have catapulted Brazil to the front ranks of energy-rich nations – industry watchers project that the country could become the world’s fourth-largest oil producer over the next decade. The Black Diamond I drillship – vital in the pursuit of capturing deepwater oil and gas reserves – has the capacity to operate in sea depths up to 3,000 meters (9,800 feet), and drill to a depth up to 10,000 meters, including area beneath the seabed (32,800 feet).
Milbank project finance partner Daniel Bartfeld led the firm’s representation, along with project finance senior associate Roland Estevez and associates Anne Shutkin, Alyssa Frederick and Jeeseon Ahn.
“International interest in the Brazilian offshore sector continues to be very strong, as major new fields continue to be identified, solidifying Brazil’s importance as a critical source of global energy for decades to come,” Mr. Bartfeld said. “We are pleased to work with some of the world’s leading international institutions in the financing of a new drilling rig to be used by Petrobras. The transaction highlights that leading lenders such as KEXIM, Mizuho, Standard Chartered, WestLB and the others have strong capacity for financing well-structured projects in Brazil’s offshore energy sector.”
Mr. Estevez added, “The international lending community is keenly interested in supporting major energy projects throughout Latin America, and nowhere is that appetite more acute right now than in Brazil. This deal, involving several of the key energy players in the country, is another example of Milbank’s ability to help leading Brazilian companies raise significant capital.”
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UAE-based Topaz Energy and Marine, a leading oilfield services multinational and subsidiary of Renaissance Services, has announced a US$ 380 million financing initiative, led by Standard Chartered Bank and DVB Bank.
The initiative will involve both regional and international lenders in a refinancing deal that features Topaz’s offshore support vessel (OSV) division, Topaz Marine, which ranks among the top ten OSV operators world-wide.
In its half-year statement, the parent-company Renaissance Services, publicly listed in Oman’s Muscat Securities Market, stated its intention to refinance some existing borrowings and consolidate financing facilities with a syndicate of banks.
Vishal Goenka, Chief Financial Officer of Renaissance, said, “This deal will significantly improve Topaz’s liquidity, unlock trapped equity, and increase the availability of new funds to capitalize on future growth opportunities. The interest from our relationship banks and also from new banks in this deal is very encouraging and reaffirms the market’s appreciation of the company’s business model and governance. Out of US$ 380 million, approximately US$ 125 million is for vessels under construction and for investments in new vessels. ”
Goenka added that the company expects the financing initiative to be completed before the end of December 2011.
“This financing, including a hunting license for additional vessel growth, puts Topaz in a unique position to accelerate from an enhanced balance sheet platform,” said Geir Sjurseth, Managing Director & Global Head Offshore Support Group of DVB Bank.
DVB Bank, which specializes in global offshore finance, is an active player in the Middle East market. “We are delighted to expand our excellent relations with Topaz and its parent company Renaissance to support the company’s continued growth objectives. DVB has gained considerable expertise dealing with Topaz through its MENA, Caspian and non-Caspian vessel operations, and we will continue to support the leading OSV operator in its core markets,” added Sjurseth.
Commenting on the alliance, Nigel Anton, Managing Director and Head of Shipping Finance at Standard Chartered Bank, said, “Standard Chartered is delighted to be able to strengthen our relationship by supporting Topaz with their ambitious growth plans; our co-arrangement of this transaction together with DVB Bank underpins our belief in the future success of Topaz. Standard Chartered as a well-capitalized and liquid bank remains fully committed to the region and the shipping business.”
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