Middle East LNG Deal of the Year – Bahrain LNG
The Bahrain LNG deal was one of new breed of LNG financings in the Middle East – a regasification terminal financing as opposed to the LNG export projects of old. The deal is part of a global trend: with LNG prices low, many developed and developing countries are looking to import the fuel – expanding the market from its traditional Japanese and South Koreans heartlands.
The US$740m Bahrain LNG debt financing provides a template for this new market. And it was carried out under challenging circumstances. Bahrain has its sovereign rating issues, now below investment grade, yet the LNG deal was able to get a 20-year international loan financing. One big reason for this was the structuring – K-Sure is covering US$580m of the debt but the K-Sure tranche was snapped up by international banks and the uncovered portion was taken by Standard Chartered, Apicorp and Ahli United. Pricing was decent at 150bp for the K-Sure tranche and 300bp plus for the uncovered.
The underlying project has an interesting structure. The project financing covers the regas terminal kit and is banked, essentially, on an availability payment. The floating storage vessel (FSU) is not part of the financing and is time chartered. This allows the FSU to be redeployed to trade as an LNG carrier if the LNG imports are not needed in Bahrain.
The Samsung C&T/Teekay LNG/GIC sponsor group won the scheme in late 2015. Teekay LNG will have 30% of the project company, Samsung C&T 20%, GIC 20% and the client, Nogaholding 30%.
The three pathfinders in the deal are Standard Chartered, Apicorp and KDB, the financial adviser is Societe Generale and the other banks are Natixis, ING, Credit Agricole, Ahli United and Santander. Norton Rose Fulbright, Galway Group and Verus Partners advised Nogaholding, White & Case advised the sponsors and Shearman & Sterling advised the lenders.