The Russian oil company Severneft is about launch syndication on a 60-month door-to-door US$240mn structured finance facility, marking the corporate’s debut appearance in the international syndicated loan market. It mandated Commerzbank as sole mandated lead arranger and underwriter in early July.

The funds will be used to finance general corporate purposes, working capital requirements, the company’s capital expenditure programme and the refinancing of previous debts. The margin on the deal has not yet been confirmed, but it will reflect the company’s status as a second-tier corporate, and therefore be higher than the pricing seen on other large-scale Russian deals.

It has been secured against pledges of cashflows from already existing contracts. In this way, the deal avoids having to mitigate completion risks and ensures the lender will receive repayments regardless of whether the borrower completes its proposed expansion plans. The facility has a 12-month grace period on repayments.

The funds are being raised to support Severneft’s change in focus as it readies itself to begin the commercial production of gas. Previously the company had been concentrating on the production and sale of condensate, a gas by-product sold to the international market.

It is now increasing its level of exploration, and developing the necessary infrastructure required to embark upon commercial production of gas. This involves the building of a gas preparation facility, a 43km pipeline with required gas pumps and connections to the Russian gas pipeline network controlled by Gazprom.

Severneft holds an E&P licence to explore hydrocarbon reserves within the Western Yaroyakhinsky field, situated in the northern part of the West Siberian plateau in the Purovsky area of Yamalo-Nenetsk autonomous region.