Four major foreign banks will finance businessman Dennis Uy’s $460 million acquisition of the 45-percent stake of Shell Philippines Exploration B.V. (SPEX) in the Malampaya gas field facility.
Highly placed sources from Singapore divulged that the lenders to Malampaya Energy XP Pte. Ltd., a subsidiary of Uy’s Udenna Corporation will be: ING Bank, Australia and New Zealand Banking Group Ltd. (ANZ), Deutsche Bank and Farallon Capital.
Sources emphasized these banks “have been the same set of lenders in Udenna’s acquisition of the Chevron stake in Malampaya.” That particular transaction worth $565 million was closed in March 2020.
For the purchase of Shell’s operating interest in the Malampaya project, the targeted closing date is by the end of this year, following completion of requisite government approvals. The sale and purchase agreement (SPA) was inked between Malampaya Energy XP and Shell Petroleum N.V. in May this year.
According to Shell, the sale of its Malampaya stake to Udenna “underwent a well-documented and structured bidding process participated in by local and international companies.”
It was specified that the winning bidder, Malampaya Energy XP, “submitted the most compelling bid across a number of considerations,” and that included the offer price; access to technical capability; financing facilities from established lenders; comprehensiveness of transition plan; and retention of SPEX staff with comparable compensation and benefits.
The names of the four lenders to the acquisition, according to sources, have been specified in the tender that the Udenna subsidiary firm had submitted to Shell.
The sources further noted that the prospective lenders to the deal had been quizzed on the ability of Udenna to honor financial obligations, but all reportedly conveyed that they rated the Uy-led firm as a “good payer”; and that economic due diligence on the asset being divested correspondingly justifies the price tender set forth by buyer-Udenna.
Sources likewise stipulated that Shell extensively pored over the bid of Udenna to see any hints of China money or interposition in the asset purchase, but there’s none that they have seen or tracked down so far.
Upon payment and final closing of the transaction, Udenna subsidiary will already take over as operator of the Malampaya field.
Its key challenge will be to shore up Malampaya gas production to satiate its commitment to off-takers. The minority share of 10-percent in the project remains in the hands of state-run Philippine National Oil Company-Exploration Corporation; while Udenna holds the prodigious majority of 90-percent.
The Malampaya consortium has a pending application for license extension so it can extend the production life cycle of the field beyond the original term of its Service Contract (SC) 38 which will expire in 2024.
Udenna previously indicated “an Upstream Decision Review Board composed of local and international industry leaders has been established to sustain strong technical capabilities and governance at Malampaya and also to support the development of future energy opportunities for the country.”