CDB contributes $150 million to $800 million syndicated loan to Black Gold Drilling for two semi-submersible drilling platforms (linked to Record ID#59968)

CDB contributes $150 million to $800 million syndicated loan to Black Gold Drilling for two semi-submersible drilling platforms in 2007 On October 25, 2007, Black Gold Drilling LLC — a special purpose vehicle and subsidiary of Schahin (a Brazilian construction firm) — signed a $800 million senior, secured, syndicated loan agreement with about 15 banks to finance the construction of two semi-submersible drilling platforms.

China Development Bank (CDB) contributed $150 million to the syndicate.

The interest rate had the potential to drop further depending on the platforms' profit margins during operation (5-7-years).

Additionally, a $80 million completion letter of credit, a completion guarantee from Schahin Engenharia, and a comfort letter from Schahin were all provided to mitigate risk for lenders.

The participants in the loan syndicate included four bookrunners/mandated lead arrangers, Mizuho Financial Group, Standard Chartered Bank, UniCredit, and WestLB, all of which contributed about $57.86 million.

Dexia Group served as the senior lead arranger, and KfW and HSH-Nordbank served as arrangers, and also contributed about $57.86 million each.

BBVA, SanPaolo IMI, Shinhan, and Itau BBA were all co-arrangers, and contributed $50 million, $50 million, $40 million, and $30 million respectively. Caterpillar and Nordkap were participants, contributing $15 million and $10 million respectively. The International Finance Corporation (IFC) contributed a $50 million loan as a participant as well.

Some sources indicate multiple Chinese banks were involved in the syndicate, one source specifying the China Construction Bank.

The proceeds of the loan were to be used by the borrower to finance the construction of two semi submersible drilling platforms known as Schahin I and Schahin III. Petrobras was expected to use the drilling platforms in the Campos Basin offshore Brazil.

The rigs (drilling platforms) were to be built by Singapore’s Yantai Raffles Shipyard Company, with whom two EPC contracts were signed, at its facilities in China.

EPC contract terms included performance guarantees issued by Sinosure for 10% of the contract values, liquidated damages equal to 5% of the contract values, and, according to some sources, retention payments equivalent to 15% of the contract values.

Schahin I was to be operated under a seven-year contract with Petrobras starting in 2010 and was designed to operate at depths up to 2,000m, with a drilling depth of 7,500 meters below the seabed. The contract was won in a Brazilian-only bid. The Schahin III rig received a five year contract after a bidding process open to international firms.

It was designed to operate at a depth of 2,400 meters, respectively, also with a drilling depth of 7,500 meters below the seabed. Construction for both rigs was expected to take 3.5-years. However, on December 18, 2009, Black Gold Drilling refinanced the $800 million due to delays in project implementation.

The portion of the refinanced loan contributed by CDB is captured in Record ID#59968.

As with the original loan, several sources indicate additional Chinese banks participated, such as China Construction Bank or Bank of China.

While the exact start and end dates of the rigs' construction are unknown, the project was completed around the end of 2011, and the rights to the two drilling platforms were sold to ICBC in 2014 through a sale-leaseback transaction in order to repay the loan.

Then, on July 13, 2021, a lawsuit was filed against a total of twelve banks (involved in one or both of the syndicates) by several subsidiaries of the Schahin Group.

The lawsuit claimed that the banks had collaborated 'with the CEO and CFO of two Schahin Group entities [to sell] the oil rigs to ICBC below fair value when the Schahin Group was in financial distress.' On February 6, 2024 the case was dismissed by a New York Bankruptcy judge who said that Schahin did not show sufficient proof of unjust enrichment and aiding in a breach of fiduciary duty claims.