Tuesday, 26 February 2013 (3 hours ago) by Rachel Hall

Brazil’s Machado, Meyer, Sendacz e Opice Advogados, Austria’s Schoenherr, Dutch firm De Brauw Blackstone and Herbert Smith Freehills LLP in the UK have helped the private investment arm of Brazil’s public pension fund provide US$1.2 billion to oil rig contractor Sete Brasil to fund the construction of 28 drill ships that will be chartered to Petrobras to exploit the country′s largely untapped pre-salt oil and gas reserves, which require major investment.

The transaction follows on from another large round of investment secured by Sete in August, when the oil rig contractor received US$2.6 billion – a deal which Machado Meyer partner Faro describes as “one of the most important transactions for the oil and gas industry last year”. The level of funding is necessary because large-scale exploration of Brazil′s pre-salt oil and gas reserves comes at a a considerable cost.

Faro thinks the investment fund will be a valuable new shareholder in Sete given its considerable experience investing in infrastructure projects. “I think Sete Brasil will no doubt benefit from their participation and corporate governance because FI-FGTS is managed by Caixa Econômica, so it’s a government-managed fund,” he says.

According to Faro, obtaining a government guarantee to back Sete’s complex corporate structure posed some difficulties. In order to secure a guarantee from the Brazilian government′s guarantee fund for naval construction (FGCN), the lawyers had to demonstrate in the deal′s structrure that the funding would be use to construct drillships. This was because normally the guarantee is only obtainable when financing is used by a company to directly pay for construction costs, unlike in Sete’s situation, where the funds provided by FI-FGTS were initially disbursed to a number of special purpose companies. “We had a legal challenge because the entity that would be executing the engineering, procurement and construction (EPC) agreement was not Sete itself but an SPE lower in the chain of the corporate structure of the deal,” explains Faro.

Counsel to FI-FGTS

Machado, Meyer, Sendacz e Opice Advogados

Partners José Virgilio Lopes Enei, Mauro Bardawil Penteado and Alberto Faro, and associates Lucas Seabras, Antonio Paulo Kubli Vieira and Larissa Leda Sabino in Brazil

(Latin Lawyer 26.02.2013)

(Notícia na Íntegra)