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QATAR's NAKILAT ADDITIONAL FINANCING IS SOLIDLY ON TRACK
July 31, 2008 Doha, Qatar Nakilat Inc., a wholly owned subsidiary of Qatar Gas Transport Company Ltd (Nakilat), successfully has raised US$1.5 billion of debt under its existing program financing (the “Program Financing”) from a group of 12 international and regional banks, together with Korea Export Insurance Corporation (“KEIC”). The incurrence of such debt will keep Nakilat adequately funded and solidly on track to complete its acquisition of a fleet of 25 LNG vessels currently under construction at the shipyards in Korea operated by Daewoo Shipbuilding and Marine Engineering Co., Ltd, Hyundai Heavy Industries Co., Ltd., and Samsung Heavy Industries Co., Ltd. As a key player in the LNG shipping sector, Nakilat set up its Program Financing and raised US$ 4.3 billion of debt (the “Initial Program Debt”) in December 2006. The Initial Program Debt financing was well received by the market and awarded the “2006 Middle East LNG Deal of the Year” by Euromoney Project Finance and the “Editor’s Choice Deal of the Year” by Marine Money International. The US$1.5 billion debt financing completed today (the “Tranche II Debt”) is part of the approximately US$ 2.5 billion additional debt (the “Additional Program Debt”) that Nakilat intends to raise over the coming 18 months in line with the flexibility offered by its Program Financing. The Tranche II Debt will be used to fund the construction of Nakilat’s fleet of 25 LNG vessels, each of which is subject to a 25-year time charter to one of Qatar Liquefied Natural Gas Company Limited (II) (“Qatargas II”), Qatar Liquefied Natural Gas Company Limited (3) (“Qatargas 3”), Ras Laffan Liquefied Natural Gas Company Limited (3) (“RasGas 3”) and Qatar Liquefied Gas Company Limited (4) (“Qatargas 4”). The Tranche II debt comprises (i) a US$925 million senior bank facility with a tenor of 17 years, (ii) a US$125 million subordinated bank facility with a tenor of 17 years, and (iii) a US$ 450 million senior bank facility insured by KEIC with a tenor of 12 years. Nakilat’s fleet of 25 wholly-owned state-of-the-art large LNG vessels will be financed by the Program Financing. In addition to the wholly-owned ships being acquired by Nakilat, QGTC has an ownership stake (43% on average) in 29 other LNG vessels, all of which are backed by long term time charters. According to Muhammad Ghannam, QGTC's Managing Director, Nakilat’s 25 wholly-owned vessels, scheduled to be delivered by the shipyards between 2008 and 2010, will serve as the floating pipeline to carry LNG for the Qatargas II, Qatargas 3, RasGas 3 and Qatargas 4 projects, which will together produce over 77 mmtpa of LNG. Mr. Ghannam stated, “The Nakilat Inc. Tranche II Debt financing once again proves Nakilat’s prime status in today’s financial market. Investors appreciate the strength of Nakilat in a challenging market. This is best demonstrated by the strong appetite from a group of anchor investors who value the financing underpinned by strong charter contracts with Qatari LNG projects. We look forward to closing the remaining financings for the Additional Program Debt and will continue to strive to identify additional high-yield investment opportunities to maximize returns to our shareholders.” Rajeev Kannan, Group Head of Structured Finance Asia Pacific, who successfully led SMBC’s financial advisory team for the transaction, was happy that the transaction was warmly received by the bank finance market before reaching the successful close. Mr. Kannan said, “When we advised our client to set up the Program Financing in 2006, the financing arrangement was challenging yet innovative and flexible. There were a number of significant “firsts” – the first time a program approach was used to finance a fleet of LNG vessels and simultaneous financial close of various funding sources – bank debt, bonds and export credits. The merits of these “firsts” are clearer seen in today’s market. We are very pleased to see that, with the flexibility inbuilt in the thoughtful program; our client manages to tap the best financing sources to fulfill their ongoing finance requirement.” SMBC served as overall financial advisor in the Tranche II Debt. Latham & Watkins advised Nakilat on commercial and legal matters while Skadden, Arps, Slate, Meagher & Flom advised the lending group. Independent consultants on the deal included Lloyd’s Register EMEA, Drewery Shipping Consultants, Marsh Ltd, and Stone & Webster Consultants. Holman Fenwick & Willan advised Nakilat Inc. and QGTC on time charter, ship building and ship management contracts.
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