Petrobras closes twin-headed giant
On June 23, Petrobras closed two giant projects in the Campos
Basin, off the coast of Brazil. The total debt financing for
Espadarte, Voader e Marimba (EVM), and the Barracuda and Caratinga
oil fields was $3.36 billion. Both transactions were signed
separately.
The EVM deal came in at $1.2 billion, with a total debt package of $980 million. The debt financing comprises a $260 million BNDES loan, a $506 million Japanese Bank for International Cooperation (JBIC) loan and a $200 million commercial bank loan. The rest of the debt package was made up of other costs and capitalised interests. All facilities carry a seven-year tenor. Equity on the project totalled some $120 million.
The eight banks that arranged the commercial facility were ABN Amro, Bank of Tokyo-Mitsubishi, Chase, Credit Agricole Indosuez, Credit Suisse First Boston, Dresdner Kleinwort Benson, Fuji and ANZ. Dresdner Kleinwort Benson and Credit Agricole Indosuez came in at participant level.
The pricing for the facility mirrored that of the Barracuda and Caratinga deal. Years one to three were priced at 350bps; years four to five at 450bps; and years six to seven at 500bps. In addition, the project included an up-front fee of 175bps.
Barracuda and Caratinga, on the other hand, came in at $2.5 billion in debt financing. Funding is provided by a consortium of international lenders, made up of Deutsche Bank Securities, Inc, Itochu Corporation and Mitsubishi Corporation acting as global coordinators. Lead arrangers were Deutsche Bank, Industrial Bank of Japan (IBJ), BNP Paribas and HypoVereinsbank, who will underwrite a $500 million senior secured bank loan. In addition, BNDES will advance up to $800 million of senior secured loans. JBIC is providing a $.1 billion direct loan. The loans include a three-year construction period as well as a seven-year amortization period, with a final maturity of 10 years.
The commercial facility was arranged by Bank of America, Banca Commerciale Italiana/Sudameris, Dai Ichi Kangyo Bank, Santander Investment Securities, ING Barings and Dresdner Bank. Each of the ten banks took up $50 million of the total facility. Fees on the facility are rumoured to have been 187.5bps.
Political risk insurance for the $500 million loan will be provided by Japan's Ministry of International Trade and Industry (MITI) and the Multilateral Investment Guarantee Agency (MIGA).
According to Gregory Moroney, managing director and head of oil and gas project finnace at Deutsche Bank Securities, Inc, ?Completion of this financing after two years is a great achievement. This is the largest financing arranged for Petrobras' offshore development program and largest for an offshore field development completed in the Americas.?
The reason for the deals being signed on the same day was that JBIC is the major lender on both transactions. ?It was entirely for convenience that the two deals were aligned,? admits a source close to the transaction.
In 1997, the bidding for both transactions was initiated, involving 15 consortia. By May of the following year, the competition had been dwindled to a mere three. From the finalists, Petrobras awarded the Barracuda and Caratinga mandate to Deutsche Bank. The EVM mandate was awarded to ABN Amro at a later date. However, given that bidding had been based on the Barracuda and Caratinga deal, the successful EVM consortium was way up on the learning curve.
By December 1999, the EVM consortium of banks had closed its bridge loan; whereas Barracuda and Caratinga failed to close its own until March 1999. This should come as no surprise, given that the latter was a larger and more remunerative transaction. However, the EVM consortium quickly closed a transaction on fields that it had not bid for prior to mandate.
Both deals were similarly structured under operating leases, with special purpose vehicles (SPVs) created in order to transact as the lessor. Barracuda Caratinga Leasing Company B.V., incorporated in the Netherlands, is owned by Itochu Corporation and Mitsubishi. EVM Leasing Co. is the EVM SPV, located in the Cayman Islands. Under the recent Brazilian legislation, oil and gas products can be deemed exports, even if only on paper. Hence the fact that both deals mark BNDES first ever entrance into the oil and gas market.
The funds, from the Barracuda and Caratinga project, will be utilised to construct two floating production, storage and off-loading facilities, the sub-sea facilities and the drilling costs for developing the oil fields. An estimated design capacity of 250,000 barrels of oil per day is expected. The EVM project, on the other hand, will produce some 147,000 barrels of oil per day.
The EVM deal came in at $1.2 billion, with a total debt package of $980 million. The debt financing comprises a $260 million BNDES loan, a $506 million Japanese Bank for International Cooperation (JBIC) loan and a $200 million commercial bank loan. The rest of the debt package was made up of other costs and capitalised interests. All facilities carry a seven-year tenor. Equity on the project totalled some $120 million.
The eight banks that arranged the commercial facility were ABN Amro, Bank of Tokyo-Mitsubishi, Chase, Credit Agricole Indosuez, Credit Suisse First Boston, Dresdner Kleinwort Benson, Fuji and ANZ. Dresdner Kleinwort Benson and Credit Agricole Indosuez came in at participant level.
The pricing for the facility mirrored that of the Barracuda and Caratinga deal. Years one to three were priced at 350bps; years four to five at 450bps; and years six to seven at 500bps. In addition, the project included an up-front fee of 175bps.
Barracuda and Caratinga, on the other hand, came in at $2.5 billion in debt financing. Funding is provided by a consortium of international lenders, made up of Deutsche Bank Securities, Inc, Itochu Corporation and Mitsubishi Corporation acting as global coordinators. Lead arrangers were Deutsche Bank, Industrial Bank of Japan (IBJ), BNP Paribas and HypoVereinsbank, who will underwrite a $500 million senior secured bank loan. In addition, BNDES will advance up to $800 million of senior secured loans. JBIC is providing a $.1 billion direct loan. The loans include a three-year construction period as well as a seven-year amortization period, with a final maturity of 10 years.
The commercial facility was arranged by Bank of America, Banca Commerciale Italiana/Sudameris, Dai Ichi Kangyo Bank, Santander Investment Securities, ING Barings and Dresdner Bank. Each of the ten banks took up $50 million of the total facility. Fees on the facility are rumoured to have been 187.5bps.
Political risk insurance for the $500 million loan will be provided by Japan's Ministry of International Trade and Industry (MITI) and the Multilateral Investment Guarantee Agency (MIGA).
According to Gregory Moroney, managing director and head of oil and gas project finnace at Deutsche Bank Securities, Inc, ?Completion of this financing after two years is a great achievement. This is the largest financing arranged for Petrobras' offshore development program and largest for an offshore field development completed in the Americas.?
The reason for the deals being signed on the same day was that JBIC is the major lender on both transactions. ?It was entirely for convenience that the two deals were aligned,? admits a source close to the transaction.
In 1997, the bidding for both transactions was initiated, involving 15 consortia. By May of the following year, the competition had been dwindled to a mere three. From the finalists, Petrobras awarded the Barracuda and Caratinga mandate to Deutsche Bank. The EVM mandate was awarded to ABN Amro at a later date. However, given that bidding had been based on the Barracuda and Caratinga deal, the successful EVM consortium was way up on the learning curve.
By December 1999, the EVM consortium of banks had closed its bridge loan; whereas Barracuda and Caratinga failed to close its own until March 1999. This should come as no surprise, given that the latter was a larger and more remunerative transaction. However, the EVM consortium quickly closed a transaction on fields that it had not bid for prior to mandate.
Both deals were similarly structured under operating leases, with special purpose vehicles (SPVs) created in order to transact as the lessor. Barracuda Caratinga Leasing Company B.V., incorporated in the Netherlands, is owned by Itochu Corporation and Mitsubishi. EVM Leasing Co. is the EVM SPV, located in the Cayman Islands. Under the recent Brazilian legislation, oil and gas products can be deemed exports, even if only on paper. Hence the fact that both deals mark BNDES first ever entrance into the oil and gas market.
The funds, from the Barracuda and Caratinga project, will be utilised to construct two floating production, storage and off-loading facilities, the sub-sea facilities and the drilling costs for developing the oil fields. An estimated design capacity of 250,000 barrels of oil per day is expected. The EVM project, on the other hand, will produce some 147,000 barrels of oil per day.
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