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The Japanese FPSO Provider, MODEC, Decided to Issue Project Bonds for International Investors to Refinance a Charter FPSO Vessel to the TUPI Consortium Led by Petrobras Aiming to Strategically Diversify Its Funding Sources for the Chartering Business
The Japanese company stated in a release this Thursday (15) that in recent years, the number of simultaneous FPSO charter projects executed by MODEC is increasing and the scale of funding for these projects is also expanding.
See Also
- Modec Opens New Base in Macaé, North Coast of Rio de Janeiro
- Next Generation FPSO from Modec Will Have New Designs
- Modec with Onshore and Offshore Opportunities for Macaé, Rio de Janeiro, and São Paulo
In response to these changes in the business environment, the objectives of issuing the projects are to improve the financial stability of the MODEC Group, diversifying its funding sources for FPSO projects, as well as ensuring financial flexibility for the future growth of the MODEC Group, the company explained.
This project bond was issued for the FPSO Cidade de Mangaratiba MV24, which was installed and is currently operating in the Iracema Sul field, operated by Petrobras, in the giant “pre-salt” region off the coast of Brazil.
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The shareholders of Cernambi Sul MV24 B.V., the owner of the FPSO, are MODEC, Mitsui & Co., Ltd., Mitsui O.S.K. Lines, Ltd., and Marubeni Corporation. The FPSO is currently chartered by a consortium formed by Petrobras (65%), Shell (25%), and Petrogal Brasil (10%) under a fixed-price charter contract that extends until 2034.
The FPSO achieved first oil production in October 2014, when the 20-year regulation of the FPSO was initiated. MODEC was responsible for the engineering, procurement, construction, mobilization, and installation of the FPSO. A company of the MODEC Group in Brazil is also providing operation and maintenance services for the FPSO, which accounts for approximately 4% of daily hydrocarbon production in Brazil.
The capital cost for constructing the FPSO was originally financed by the equity capital of the four sponsors of Cernambi Sul MV24 B.V., as well as by project financing from the Japan Bank for International Cooperation (JBIC) and commercial banks. Proceeds from the project bond issuance were used to refinance project financing and make a distribution to the sponsors.
First Project Bond for FPSO
MODEC said that this transaction marks the first project bond for an FPSO project sold in the Regulation S / Rule 144A market, and was sold to a wide range of international investors outside Japan, primarily in Europe and the United States.
According to the Japanese company, total investor demand for the issuance was approximately twice the value of the $1.1 billion bond issuance.
MODEC is currently executing 11 FPSO charter projects simultaneously worldwide, and an additional four FPSOs are currently under construction.
With various means of financing, which can be applied to existing and new charter projects, MODEC is able to respond with greater flexibility to the recent increasing demand for FPSOs, thus establishing a solid position in the FPSO industry, the company concluded. More information about this transaction on the MODEC website here.
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