CCB contributes to $525 million syndicated loan for Sevan Brasil drilling rig in December 2010

In December 2010, Sevan Drilling Rig II Pte Ltd — an indirectly owned subsidiary of Sevan Drilling ASA — entered into a $525 million credit facility agreement with a syndicate of lenders (led by ING Bank as agent) for Sevan Brasil. Sevan Brasil was contracted to Petrobras on a six-year drilling contract for operations off the coast of Brazil. The $525 million credit facility included three tranches: a commercial facility tranche, a GIEK/Eksportfinans tranche, and a Sinosure-backed China Construction Bank tranche. The Eksportfinans portion of the facility was guaranteed by Garantiinstituttet for Eksportkreditt (GIEK). The GIEK/Eksportfinans tranche was later assigned from Eksportfinans to the Norwegian Ministry of Trade and Industry, following a decision by the Norwegian government. Interest accrued at LIBOR plus an average margin of 310 basis points from the time of acceptance. The final maturity date of the commercial tranche and the Sinosure-backed China Construction Bank tranche was May 2018. The maturity date for the GIEK/Eksportfinans tranche was May 2020. The loan was to be repaid in quarterly instalments during the tenor of the loan. As of February 2013, $479 million was outstanding under the facility. The loan facility was structured as a project finance facility on a single purpose basis, with securities customary in this type of financing, including by a first mortgage over the unit, assignment of earnings and insurances, pledge of accounts, security in various contracts, and share pledges. The loan agreement contained customary provisions for this type of financings, such as (i) mandatory prepayment provisions relating to loss events, termination of charter and other project contracts, (ii) restrictive covenants regarding, inter alia, dividend distribution, the operation and sale of the unit, change of ownership, and amendments to material contracts, and (iiii) detailed reporting and compliance requirements. There was a debt service cover ratio covenant of not less than 1.1:1.0. There were additional financial covenants related to minimum liquidity, an equity ratio of minimum 30%, and operational leverage on a forward looking basis. The loan was guaranteed by Sevan Drilling ASA. Sevan Brasil was built in 2012 in the COSCO Shipyard in China. It is a 6th generation Sevan 650 DP semi-submersible offshore drilling rig. Sevan Brasil completed acceptance testing and commenced work under its six year contract on July 24, 2012. Then, on September 24, 2012 Sevan Brasil experienced problems with the blow-out preventer (‘BOP’) control system. It was later discovered that the BOP control system was damaged due to human error during installation and testing. The BOP was sent to the manufacturer for repair. Then, on October 22, 2012, Sevan Drilling ASA announced an agreement with Petrobras to use Sevan Brasil for alternative work, not requiring the BOP. The rig worked on a reduced rate of 80% from the day of the announcement. On November 13, 2012, Sevan Drilling ASA announced that Sevan Brasil had completed drilling of the top-hole section and moved back to the original location. Repair of the BOP was completed and functionally tested on the rig floor. On November 16, 2012, Sevan Drilling ASA announced that testing of the BOP for Sevan Brasil had been completed and accepted by Petrobras and that the rig was back on full day rate as of 09:00 a.m. CET the same date. On December 31, 2012, the loan contract was amended. The amendments pertaining to the Sinosure/China Construction Bank tranche included a commission fee of 50bps in 2013, payable quarterly and ranking pari passu with interest payments, which would increase to 100bps per annum from 2014 onwards. Then, on July 23, 2013, Sevan Drilling Limited announced that it had signed a $1.75 billion five-year secured corporate loan agreement with a syndicate of commercial banks and export credit agencies (including China Eximbank) for the purpose of refinancing all outstanding debt of the company related to the two operational drilling rigs (Sevan Driller and Sevan Brasil) as well as financing for the delivery of Sevan Louisiana and Sevan Drilling Rig 4 (both of which were under construction at COSCO shipyard. The loan syndicated was coordinated by ING Bank N.V. As of November 2013, Sevan Drilling Limited had drawn down $1.4 billion of the $1.75 billion bank facility.

Additional details

1. The exact size of China Construction Bank’s contribution is unknown. For the time being, AidData assumes that all three of the known members of the lending syndicate contributed equally ($175 million) to the $525 million loan. 2. AidData has estimated the all-interest interest rate by adding 3.1% to the average 6-month LIBOR rate in December 2010 (0.458%). 3. Sevan Drilling Rig II Pte Ltd is a special purpose vehicle that is legally incorporated in Singapore created for the construction and management of the Sevan Brasil drill. It is an indirectly and wholly owned subsidiary of Sevan Drilling ASA, a public limited liability company organized under the laws of Norway and international offshore drilling contractor specializing in ultra deep water rigs. Sevan Marine ASA was formerly the parent company of Sevan Drilling ASA, but in December 2011, Sevan Marine was acquired by Seadrill Ltd. Thus, Seadrill became the owner of 28.52% of Sevan Drilling ASA's shares, becoming the largest shareholder. For an in-depth discussion of the company's ownership structure and mechanism for contracting with Petrobras, see pages 69-73 of the Sevan Drilling ASA bond prospectus dated February 12, 2013.

Number of official sources

8

Number of total sources

13