Etesco Cements Platform Loan

Drillship sponsor Etesco has raised $650m for a new 10-year Petrobras drillship concession. The deal includes a $380m commercial tranche with a 2.5-year construction period at Libor plus 325bp and an abbreviated post-completion period of 6 years at Libor plus 300bp, say project bankers on the deal. Challenging market conditions led Etesco to opt for a shorter post-completion period, which means it will need to refinance the facility within the coming several years in order to guarantee funds for the full 10-year contract. The commercial portion was split between 4 bookrunners and 2 MLAs. SMBC, Mizuho, Tokyo-Mitsubishi and ING led the deal, each taking tickets of around $72m. MLAs Standard Chartered and Societe Generale joined the group later with $50m tickets, says a banker on the deal. A $270m ECA tranche financed by Norway’s Export Finance and guaranteed by the same country’s credit insurer Giek makes up the remainder of the facility. Pricing on the ECA tranche is heard to be a little under the commercial portion, paying a fixed rate. The funding will be disbursed by the end of the year, when the $160m or so in equity financing Etesco has contributed to the project has been spent, say bankers close to the process. The deal, in the works for close to 12 months, strikes an encouraging tone for a challenged part of the LatAm project finance market. Odebrecht’s $850m 10-year drillship project financing has been struggling to bring in commitments, though a recent adjustment to price has given the transaction momentum and bankers away from the deal say they believe it will close eventually. Schahin has a concession similar in size to Odebrecht that it will look to finance in the loan market too, either at the end of this year or in 2010.