Delba Group connection
Market Wire, January, 2008
E-mail Print Link WestLB Capital Markets Latin America acted as Sole Bookrunner and Underwriter to provide a USD 488 million senior secured debt financing for the construction and operation of an ultra-deep water semi-submersible offshore drilling rig for Delba/Interoil in Brazil. The transaction benefited from the support of the Inter-American Development Bank in the form of an IDB A/B loan with the IDB committing USD 100 million to the transaction.
According to Carla Tully, one of the IDB team leaders, "IDB is pleased to enter the oil sector with this transaction, particularly given the considerable developmental benefits to Brazil resulting from the financing, including the creation of jobs and training under Brazil's PROMINP program, as well as the opportunity to enhance the competitiveness of one of Brazil's growing companies in the sector."
In addition, WestLB also acted as Financial Advisor and Arranger for the client and placed USD 130 million of financial equity for the project, initially provided by MPC Capital AG of Hamburg.
"WestLB was able to provide the client with an integrated solution that encompasses advisory on the equity side, arranging and fully underwriting the debt financing, integration of a multilateral institution and an interest rate hedging program throughout the life of the transaction," said Oliver Langel, Executive Director in WestLB's Latin America Group. "WestLB was also able to support the financial equity obligations of MPC by providing an initial bridge financing on behalf of the client."
The vessel is a Gusto MSC TDS 2500, capable of drilling in water depths of up to 2740 meters, and will be constructed under a fixed price, turnkey Engineering, Procurement and Construction Contract with Single Buoy Moorings Inc. of Switzerland at a shipyard owned by Gulf Piping Company W.L.L. in Abu Dhabi. The project finance facility is largely secured by seven-year charter and services contracts between the Project and Petrobras within the framework of the PROMINP program. The contracts provide for market day rates and contemplate bonus payments for performance above certain parameters.
According to Thomas Friebel, Head of Loan Syndication Latin America, "WestLB was able to successfully syndicate and oversubscribe the IDB B-Loan in a challenging global credit environment, especially for a sponsor that compared to its peers, has limited financial strength, but a very strong and solid track record in the industry."
The transaction was placed with international institutions active in the marine business, among them Dexia, DVB, KfW, Depfa, Itau BBA, Natixis, Cifi, Nordkap, and Caterpillar Financial Services.
"WestLB's successful syndication, which has the largest B-Loan in the Oil and Gas sector of any IDB financing to date, highlights IDB's catalytic role in bringing international financial institutions into IDB-financed transactions," added Lori Kerr, the other IDB team leader.
The credit facilities consist of three tranches: a project loan, a contingency/working capital loan and a mobilization loan. The project loan is a 10.5-year construction and term loan facility of up to USD 460 million to finance up to 80 percent of the project costs. The contingency/working capital facility of up to USD 12 million will finance a combination of up to 50 percent of potential construction cost overruns after the contribution of USD 12 million in contingent equity by the sponsors and initial working capital. The third tranche is a short-term facility of up to USD 16 million to finance the mobilization and transportation of the drilling rig from Abu Dhabi to Brazil.
Transaction highlights include:
-- The transaction is structured as an Inter-American Development Bank
A/B loan, the first time the IDB has been active in the oil sector, and
features the largest IDB B-Loan in the Oil and Gas sector to date.
-- The financing consists of a 3.5-year construction phase and a 7-year
operating and amortizing phase.
-- The financing was extremely well received by the market, as evidenced
by its significant oversubscription.
-- WestLB was able to provide an integrated solution to the Sponsor by
arranging the debt as well as the equity portion of the project.
About the Sponsors
The Delba Group has been doing business in Brazil with Petrobras and other oil companies for the past 40 years, either through its companies or through representation of foreign companies. The main companies of the group include CPDB, a provider of drilling services, Delba Maritima Navegacão, an offshore support company and Aeroleo, a helicopter company which provides services to Petrobras and other oil companies in Brazil. Delba has partnered with Interoil, a Brazilian group active in the oil and gas sector as well as supporting industries for the operation and management of the rig.
MPC Münchmeyer Petersen Capital AG, member of the Münchmeyer Petersen Group, has been active in the maritime financing sector since its inception in 1994 and is the market leader in closed-end funds in Germany with Euro 6 billion in equity placed and more than 260 funds launched. MPC Capital AG is a public company and is listed in the SDAX
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