Mandated lead arrangers BBVA, BNP Paribas, Scotia Bank, Standard Bank and Natixis closed a US$170mn syndicated senior secured medium-term loan for Peruvian oil company Pluspetrol Norte in December 2007. The deal stands out as a rarity in the market, given it is a pre-export facility for a Peruvian borrower that ended up with an oversubscription in syndication.
Carrying a five-year tenor and a margin of 125bp in year one and 150bp thereafter, the US$170mn facility proved very popular in the market with regional and international banks being forced to scale back their initial commitments.
“Syndication was successful despite deteriorating financial markets and tight time frame for closing,” observes Pedro Chirinos, vice-president, energy finance, Americas, at Standard Bank.
Bookrunners are Standard Bank (facility agent), BBVA, and Scotia Bank, and MLAs are Calyon, Santander Rio, BNP Paribas and Natixis. ABN Amro, Fortis and BCP complete the senior banking group while Rebaza, Alcazar & De Las Casas was legal advisor to the lenders.
Given the tightening supply of global liquidity, Pluspetrol Norte – the Peruvian subsidiary of an Argentine oil company – has secured impressive margins, and all the more so given the paucity of Peruvian pre-export finance facilities in the market.
The security is based upon an assignment of trade receivables from Block 1-AB under Peruvian law and payment domiciled on a US-based collection account pledged in favour of the lenders.
Financial covenants include an interest coverage ratio and – rarely seen on pre-export facilities – a reserve life coverage ratio.
“To attract international banks the deal structure required to mitigate potential local currency exposure, which was addressed by a sound security package. Deep understanding of Pluspetrol’s oil operations contributed to fast execution of this complete financial solution,” comments Fernando Docters, director, energy finance, Americas, at Standard Bank.
The purpose of the loan is to refinance some existing obligations and provide funding for general corporate purposes.
The repayment schedule is straightforward, including a one-year grace period followed by 17 equal quarterly instalments.
Anne Ulrich, managing director for Latin America in the upstream and structured finance department at Natixis, comments: “This is something of a milestone transaction for Peru and was extremely well received. Pluspetrol Norte works in a challenging environment but continues to achieve very positive results and development in the region.”
Pluspetrol Norte is Peru’s largest oil exploration and production company with net production of approximately 40,000 barrels per day, representing 60% of the country’s total production.
However, it purchased Block 1-AB in 2000 as a declining oilfield which Occidental had been running since 1972. As such, Pluspetrol Norte has been challenged with profitably running declining fields, in a sensitive natural and political environment (the Peruvian Amazonian forest), while simultaneously attempting to make new discoveries.
Mandated lead arrangers: BBVA; BNP Paribas; Calyon; Scotia Bank; Natixis; Standard Bank; Santander Rio
Tenor: 5 years
Law firm: Rebaza, Alcazar & De Las Casas
Margin: Between 125-150bp