Shipping Finance

In March 2007, DVB's Floating Production Group (FPG) together with the Norwegian export credit agency GIEK and Eksportfinans, extended a three-year US$320 million facility to Nexus Floating Production Ltd for the part financing of the construction of a newbuild floating production, storage and offloading unit (FPSO) "Nexus 1". Nexus 1 was built to high specifications and capable of operating in the most highly regulated areas and the harshest environments. The project was fully funded to delivery, and its aim was to secure employment by the time of scheduled delivery in July 2009. Due to the global financial crisis and lack of oil and gas projects coming on stream, Nexus 1 was unable to secure employment upon completion in the third quarter of 2009. This made it difficult for Nexus to secure the required working capital for operations following the delivery of the FPSO, leading the company to put Nexus 1 for sale. EBX Group of Brazil emerged with the winning bid and the acquisition was completed in November 2009. The EBX Group is Brazil's third largest non-financial conglomerate, with a focus on natural resources and infrastructure. It is the second largest owner of offshore oil reserves in the country.

EBX Group was seeking long-term financing for OSX 1 (former Nexus 1). Although it has no lack of relationship banks, EBX Group mandated DVB's FPG as the sole lead arranger, given its industry expertise and prior experience and knowledge of OSX 1. FPG needed to put in place an 8.5-year US$420 million secured term loan for OSX 1 Leasing B.V., backed by a "hell and high water" bareboat charter of the unit to the EBX subsidiary OGX. FPG and GIEK renewed their previous commitments for the OSX facility and targeted a further US$100 million in debt raising from international financial institutions with experience in offshore project financings, thereby taking the client’s desire to expand banking internationally into consideration. With the assistance of DVB’s Financial Institutions team, commitments of US$170 million were subsequently secured from four banks, thereby allowing FPG to reduce its initial committed amount from US$155 million to US$85 million.

The process has been exciting and particularly lucrative for FPG. DVB elected the OSX transaction deal of the year as it illustrates qualities that are highly regarded and encouraged in DVB, namely in-depth expertise of assets and the sectors they operate in – and (last but not least) top-notch financial and debt structuring skills.