Adding to its reputation as a leader in complex oil and gas financings, Milbank advised the Commercial Lenders, Islamic Investors, Hedge Banks and their respective agents in connection with the financing of the Jambaran Tiung Biru (“JTB”) gas field unitization project for PT Pertamina EP Cepu (“PEPC”), a wholly owned subsidiary of PT Pertamina, Indonesia’s state-owned oil and natural gas corporation, the country’s largest state-owned entity and one of its largest crude oil producers.
Drilling at the Jambaran and Tiung Biru gas fields was scheduled to commence in the second half of 2019. It is anticipated that part of the gas sold from the JTB project will be used for electricity generation by Indonesia’s state electricity generator, with the remainder being allocated to use by industrial customers in East Java.
Proceeds of the approximately US$1,846,400,000 multi-tranche conventional and Islamic financing will be used to construct and develop gas processing facilities and spur pipelines to monetize existing gas reserves. The project is being financed through a limited-recourse ‘Trustee Borrowing Scheme’ (TBS) structure, with a single source of debt service created from revenues generated primarily under a long-term gas sales agreement with PT Pertamina as the offtaker.
Milbank advised the Commercial Lenders, Islamic Investors and Hedge Banks, which comprised Bank of China (Hong Kong) Limited; CIMB Bank Berhad; DBS Bank Ltd.; Intesa Sanpaolo S.P.A.; Malayan Banking Berhad; MUFG Bank, Ltd.; MUFG Bank (Malaysia) Berhad; PT Bank BTPN Tbk; PT Bank Mandiri (Persero) TBK.; PT Bank Negara Indonesia (Persero) Tbk; PT Bank Rakyat Indonesia (Persero) TBK; and Sumitomo Mitsui Banking Corporation.
The Milbank team was led by Singapore-based partners James Murray, James Orme and David Zemans, together with Singapore-based associate Rob Thompson and legal assistant Gabby Wong, London-based associate Munib Hussain and Tokyo-based special counsel Justen Fleming. MUFG acted as financial advisor, Latham & Watkins LLP represented PEPC as sponsor and HSBC Bank USA, N.A. as trustee borrower. Ali Budiardjo, Nugroho, Reksodiputro (ABNR) acted as Indonesian legal counsel to the Lenders and UMBRA acted as Indonesian legal counsel to PEPC.
Mr. Zemans said: “Pertamina’s well-subscribed financing demonstrates how a well-regarded sponsor like Pertamina can successfully bring a deal of this size and complexity to market. Milbank is thrilled to have supported the parties on this innovative oil and gas financing.”
Mr. Murray also commented: “Given Milbank’s familiarity with the trustee borrowing scheme, it was very gratifying to support the lenders – some of whom were participating in this type of financing for the first time – on this successful transaction.”
