Milbank Closes Innovative Financing of Salamander Energy’s Acquisition of Upstream Assets in Indonesia
First of Its Kind In Asia – Structure Combines $37 Million Oil & Gas Borrowing Base Financing with Upstream Acquisition Deal
SINGAPORE, February 24, 2006 – Underscoring its reputation for pioneering financing structures and its expertise in the oil and gas industry, the international law firm Milbank, Tweed, Hadley & McCloy LLP represented oil and gas independent Salamander Energy Limited (“Salamander”) in its acquisition via a special purpose vehicle of all of the interests of Citigroup Financial Products Inc. (“Citigroup”) in Orchard Energy Holding Java & Sumatra B.V. (“Orchard Energy”). Funding was provided by Sumitomo Mitsui Banking Corporation Europe Limited in a cutting-edge transaction involving a US$37 million borrowing base facility.
Milbank’s Singapore office represented Salamander in both the acquisition and the financing. The Milbank team was led by global project finance partner Gary Wigmore and senior associate Ashley Wright. The core deal team for the acquisition and financing included partner David Zemans and associate Robert Clarke, as well as tax partner Russell Jacobs and associates Caroline Dreyfus and Chloe Walsh in the London office.
Gary Wigmore, head of Milbank’s Asian Project Finance practice, commented, “This is the second oil and gas borrowing base facility that Milbank has worked on in Asia in the past year (and we are close to finalising two others), but this is the first which has underpinned an acquisition. Not only does this deal cement our position as the leading law firm for this complex form of lending, but takes the structure for the first time into Asian acquisition financing. This structure enabled Salamander to implement their strategy quickly and efficiently.”
Ashley Wright, who has extensive experience in the oil, gas and petrochemical sector, stated, “This deal demonstrates the continued growth of our oil and gas practice in Asia. Salamander wanted to do this deal quickly and we were able to complete the financing and the acquisition within 16 weeks of first being instructed by Salamander to draft the offer letter to Citigroup.”
About the Transaction
Salamander Energy has secured a $37 million borrowing base term loan from Sumitomo Mitsui Banking Corporation Europe Limited. The facility is a seven year non-recourse loan based on the expected present value of future proven plus probable reserves production from the oil and gas reserves. (Borrowing base facilities are a form of non-recourse project financing which have financial covenants which include net present value calculations using regular measurement and assessment of oil and gas reserves.)
Salamander Energy Limited is a UK based private oil and gas company focusing on exploration and production in Southeast Asia. The company currently has offices in London and Singapore.
Orchard Energy Holding Java & Sumatra B.V. is a Singapore based energy company. The company has a working interest of 5% of the offshore North West Java (“ONWJ”) production sharing contract and 5% in the South East Sumatra (“SES”) production sharing contract, which both supply gas to state utilities in Java and crude oil to Mitsubishi.
About Milbank
With offices in Asia for more than 25 years, Milbank has one of the deepest and broadest practices among U.S. firms in Asia, encompassing capital markets, private equity/M&A and acquisition finance, project finance, restructuring, structured products transactions, leasing and transportation finance. Milbank currently has approximately 35 attorneys resident in its Hong Kong, Singapore and Tokyo offices, with attorneys qualified to practice New York and English law.
Milbank continues to be at the forefront of some of the most notable deals in Asia, including the largest corporate debt offering ever, the largest restructuring ever, and two of the largest private equity deals. Milbank has played an active role in landmark transactions spanning virtually every Asian country and across diverse industries.
With more than 75 dedicated project finance attorneys in the firm’s offices worldwide Milbank’s Global Project Finance Group is one of the largest and most experienced among the world’s major law firms. Renowned for its leadership, Milbank has pioneered some of the most innovative project financing techniques, and consistently ranks among the top law international law firms by industry trade publications. In 2005 the Group was involved in a record ten “DEALS OF THE YEAR” awarded by Euromoney’s Project Finance magazine. In addition, the Group ranks among the top law firms in Project Finance magazine’s “LEGAL ADVISERS REVIEW 2005/2006.” As the project finance marketplace has evolved, Milbank’s Global Project Finance Group has expanded the range of products and services by working in conjunction with attorneys from other practice areas including financial restructuring, mergers & acquisitions, development and structured and commodities finance, and leveraged finance and capital markets.
Milbank, Tweed, Hadley & McCloy LLP is a premier global law firm headquartered in New York, with offices in Los Angeles, Washington, D.C., London, Frankfurt, Munich, Tokyo, Hong Kong and Singapore. Milbank is a recognized leader in capital markets, corporate finance, project finance, acquisition finance, and other major fields of legal practice. The Firm's practice includes cross-border mergers and acquisitions and global securities transactions as well as assisting multinational clients with their cross border investments. Milbank provides a full range of services to many of the world’s leading financial, industrial and commercial enterprises, as well as governments, institutions and individuals.