Banks syndicate $227m FPSO for Chim Sao field

Six leading local and international banks Wednesday signed a $227 million syndicated loan agreement with Singapore’s PVKEEZ Ltd for financing its floating production, storage and offloading unit (FPSO) to serve Chim Sao field (offshore Vietnam).

Vietn Nam News reporter Thu Ngan spoke with Tony Nguyen managing partner of EPLegal who represents the borrower in this transaction:

EP Legal is the legal consultant for PVKeez Ltd Can you describe in detail the nature of the deal?

This is a syndicated loan of $227 million for the FPSO conversion project of PVKEEZ Ltd, a Singapore-based special purpose joint venture owned by PetroVietnam Transportation Corporation (16.6 percent), EOC Limited (26.7 percent), Ezra Holding Limited (36.7 percent) and KSI Production Pte Ltd (20 percent) with a total investment capital of around $ 405 million. The utilisation period is six years. There is a two-year grace period. PVFC is the lead arranger, while Vietinbank is the facility agent. Four major Vietnamese and international law firms have been engaged, including EPLegal, which is the borrower’s legal counsel.

Is this syndicated loan arrangement new to the Vietnamese financial market?

Syndicated loans are nothing new. This type of loan arrangement has been used for many large-scale financing projects in Vietnam. However, as far as I’m aware, this is the first time it has been done for a Singaporean entity. That is why it took nine hard months to finalise.

As you have indicated, this is the first time a loan has been extended to an offshore entity. Were there any major challenges involved?

The agreement was extremely difficult because of legal differences in financial practices between the Singaporean borrower and lenders (mostly Vietnamese banks). However, with the help of legal consultants and the negotiating team, those differences were overcome.

Could you give some comments on the legal framework for the provision of credit services?

The provision and recovery of overseas loans is regulated by Ordinance No 28-2005-PL-UBTVQH11 on Foreign Exchange Control and Decree 160/2006/ND-CP (Decree 160), which authorises credit institutions to provide overseas loans in accordance with SBV (State Bank of Vietnam) rules. In 2007, the SBV began drafting a circular on the “provision and recovery of foreign loans”. I think current legal framework for offshore loans is not clear enough. There should be more detailed regulations formulated.

Do you think there will be similar overseas credit loans procured by offshore entities in the near future, particularly in the oil and gas sector?

Yes, definitely. In this case the borrower is a Singaporean entity but the loan is for an oil and gas development project in Vietnam. This is a good example of how domestic strengths can be optimised.

Tags: Chim Sao field