Annual Review 2009 - Watson, Farley & Williams

12 MARITIME
Maritime
The near-collapse of the shipping market in late 2008,
caused in no small part by the global financial crisis,
led to a dramatic drop in asset values and loss of income.
Markets have since recovered a little but overcapacity
continues to cause difficulty. Some sectors have been
more severely affected than others.
Bank Debt Deal
of the year at
the Marine
Money Awards
MORE DEALS...
> Advised Standard Chartered Bank
on a loan facility of up to US$50
million to Grindord Shipping Ltd.
> Advised KEXIM on a US$142
million loan facility for two
new vessels.
> Acted for Precious Shipping Public
Company Ltd in relation to a credit
facility arranged by DnB NOR.
> Advised Teekay Offshore Partners
L.P. on a US$260 million financing
for the Petrojarl Varg FPSO unit,
arranged through a commercial
banks syndicate led by ING.
> Advised a major Greek bank on a
term loan facility of up to US$160
million to finance part of the
acquisition cost of two 165,000 dwt
Suezmax tankers.
Newbuildings that were contracted in the
boom times have been in trouble, with buyers
struggling to secure finance and looking for
any opportunity to escape from contracts where
the value of the ship has fallen considerably
below the price.
As a result of this challenging period for the
industry, much of our maritime work during
2009 arose from default, restructuring,
distressed sales and disputes, but there were
new deals.
CROSS-BORDER FINANCING
FOR FPSO VESSEL
With an estimated 50 million barrels of oil
reserves, Oyo was one of the first oil fields to
be discovered offshore Nigeria. Thousands
of miles away in Malaysia, Bumi Armada – the
country’s largest owner and operator of offshore
vessels – was commissioned to convert an oil
tanker into a floating production storage and
offloading (FPSO) vessel for Oyo.
WFW Singapore advised Armada Oyo Ltd
– a subsidiary with responsibility for the FPSO
at Oyo – on securing a US$190 million limited
recourse loan facility to finance around 75%
of the project cost. The financing was arranged
by Japanese bank Sumitomo Mitsui Banking
Corporation, executed with a group of six other
banks based on three continents, and backed by
a guarantee from an Italian credit agency new
to the FPSO market.
The highly complex and multi-jurisdictional
deal won Bank Debt Deal of the year at the
Marine Money Awards.
Chartered to Nigeria Agip Exploration, part
of major oil and gas operator ENI Group, the
FPSO has a processing capacity of 45,000
barrels of oil per day and a storage capacity of
one million barrels of processed oil, with water
and gas injection capabilities in its topside.
The field began production at the end of 2009.
COMPLEX OWNERSHIP TRANSFER
WFW advised Commerzbank AG on the
transfer of three new capesize ships under
construction at the Sungdong shipyard in
Korea after one of its customers was unable to
meet its loan obligations to Navios Maritime,
a US-listed shipping company.
The bank enforced its security and as a result
the ownership of the newbuildings was
transferred to Navios Maritime. It also
transferred the ships’ charters with Korean Line
Corporation and Hanjin Shipping to Navios.
It is rare for a lender to enforce security for
ships still under construction. The transfer of
the ships’ charters made this matter even more
challenging for our teams from Piraeus, London
and Singapore who achieved a very favourable
result for Commerzbank.