Annual Review 2009 - Watson, Farley & Williams

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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.
KFW IPEX/STENA Shipbuilding at Wadan yards in Northern Germany was under threat when it became insolvent in 2009. In order to ensure continued business for the yard under its new ownership, the German government was keen that the construction of two ferries ordered by Swedish company Stena should proceed. WFW London advised German bank KfW IPEX – a specialist in international project and export fi nance – on a Hermes-backed fi nancing deal for the second of the ferries. ALLOCEAN RESTRUCTURING After Australia-based Allco Finance Group went into administration, WFW London and Singapore acted for HSH Nordbank advising lenders and swap banks on the restructuring of syndicated loan facilities for subsidiary marine group Allocean, and on the transfer of its fl eet of 33 ships. These included offshore support vessels, liquefi ed petroleum gas ships, tankers, container ships and bulk carriers. We also advised on the impact of the insolvency on owning companies. MARITIME 13 Watson, Farley & Williams Annual Review 2009
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