COSCO provides $80 million vendor credit for Sevan Brasil (Linked to Record ID#92532)

COSCO provides $80 million vendor credit for Sevan Brasil In 2008, the Sevan Brasil drilling rig was ordered from China COSCO Shipping Corporation Limited (COSCO) by Sevan Drilling ASA.

Sometime between this order and December 31, 2009, COSCO provided an $80 million vendor (seller's) credit to Sevan Drilling Rig II Pte Ltd., an indirectly owned subsidiary of Sevan Drilling ASA and the owner and operator of the Sevan Brasil drill. The loan matures January 1, 2015 and has an annual interest of 9.0% pay in kind.

Sevan Brasil was contracted to Petrobras on a six-year drilling contract for operations off the coast of Brazil and was built in 2012 in the COSCO Shipyard in China.

At delivery of Sevan Brasil in 2012, a final payment of $26.5 million to COSCO was deferred and subsequently funded from the USD 80 million vendor credit arrangement. As such, there is only evidence for $26.5 million being drawn down from the vendor credit.

The rig was additionally funded by a $525 million syndicated loan that included a contribution from China Construction Bank (captured via Record ID#92532). The Sevan Brasil drill is a 6th generation Sevan 650 DP semi-submersible offshore drilling rig. Sevan Brasil completed acceptance testing and commenced work under its six year contract on July 24, 2012.

Then, on September 24, 2012 Sevan Brasil experienced problems with the blow-out preventer (‘BOP’) control system. It was later discovered that the BOP control system was damaged due to human error during installation and testing. The BOP was sent to the manufacturer for repair.

Then, on October 22, 2012, Sevan Drilling ASA announced an agreement with Petrobras to use Sevan Brasil for alternative work, not requiring the BOP. The rig worked on a reduced rate of 80% from the day of the announcement.

On November 13, 2012, Sevan Drilling ASA announced that Sevan Brasil had completed drilling of the top-hole section and moved back to the original location. Repair of the BOP was completed and functionally tested on the rig floor.

On November 16, 2012, Sevan Drilling ASA announced that testing of the BOP for Sevan Brasil had been completed and accepted by Petrobras and that the rig was back on full day rate as of 09:00 a.m. CET the same date.