Bank of Communications contributes $54.7 million to $547 million syndicated loan for La Muralla IV Project

Project narrative

On June 26, 2012, LaForta-Gestão e Investimentos, Sociedade Unipessoal, Lda -- a special purpose vehicle and wholly-owned subsidiary of Offshore Drilling Holding, Ltd. (ODH) -- signed a $547 million syndicated loan agreement with a group of banks, including China’s Bank of Communications, Mizuho Corporate Bank, Ltd., WestLB AG, Korea Development Bank, Santander, Banco Vizcaya Argentaria, S.A. (BBVA), Banco National de Mexico (Banamex, now known as Citibanamex), HSH Nordbank, KfW IPEX-Bank, and the Bank of Nova Scotia (Scotiabank). China’s Bank of Communications New York branch contributed $54.7 million to the syndicated loan. The Export-Import Bank of Korea provided a separate loan for the project. The borrowing terms of the loan are unknown. However, it is known that the loan was subject to a mortgage in favor of the syndicate of banks that financed the purchase of the La Muralla IV drilling rig. It is also known that, following the termination of a charter agreement with Pemex for La Muralla in November 2019, the loan was repaid in full. La Muralla IV is a Korean-built deepwater drilling rig designated for oil exploration in the Gulf of Mexico. The rig could operate in water depths up to 10,000 feet and drill up to 35,000 feet. According to photos on the Grupo R website, the La Muralla IV Project was completed. However, its precise implementation start and end dates are unknown. There are indications that the La Muralla IV Project financially underperformed, On June 16, 2022, Portugal-based Laforta Gestao E Investimentos Sociedade Unipessoal LDA filed a chapter 11 bankruptcy case in the Southern District of Texas (Judge Jones). According to the filing, "[t]he Debtor filed its chapter 11 case because it has no money, no revenue stream, likely over $1 billion in secured debt, and an uncertain path to realizing value from a sole asset. The asset requires material investment and attention to maintain and return to an active operating state. The asset is La Muralla IV, a ten-year old, sixth-generation, ultra-deepwater semisubmersible drilling rig. [...] La Muralla is not currently chartered. It is running low on fuel and has no liquidity with which to acquire more fuel. It does not have a functioning anchor (perhaps no anchor at all). It is under-crewed. It is currently prevented from moving by the harbormaster until a 'no dispatch' order is resolved. It is uninsured. The Debtor, its parent, and certain of its noteholders have been working to find a solution for quite some time. At this point, there is no alternative to chapter 11."