In its latest large capital markets transaction in the energy sector, Milbank, Tweed, Hadley & McCloy LLP has represented SBM Offshore N.V. in the $450 million bond offering supporting the company’s natural gas production center deployed in the Deep Panuke natural gas field off the coast of Nova Scotia.

In addition to the “Deep Panuke” natural gas production platform, Netherlands-based SBM Offshore owns and operates the world’s largest fleet of floating, production, storage and offloading vessels, known as FPSOs. The company owns and operates a fleet of 19 units operating in the biggest offshore energy hubs in the world - the Gulf of Mexico, Brazil, West Africa, the North Sea and Southeast Asia.

SBM Offshore will use proceeds from the bond sale to support its fixed platform production field center “Deep Panuke,” which is under charter to leading Canadian energy producer Encana Corp. The Deep Panuke is being used to produce and process natural gas extracted some 155 miles from the coast of Halifax, Nova Scotia. It can process up to 300 million cubic feet of natural gas per day.

The offering was comprised of floating senior notes, with an average life of approximately 4 years and a coupon of 3.50%.  Placement agents on the transaction were ABN Amro Securities; CIBC World Markets; Mitsubishi UFJ Securities; and Natixis Securities.  The offering closed on October 31, 2014.

In October 2012, Milbank represented SBM in its first foray in the private placement market - a $500 million, 15-year bond offering used to refurbish a large FPSO vessel in Brazil; it was the first private placement in Brazil’s offshore oil sector.  The vessel funded in that transaction is operating under a long-term lease between SBM and Brazil’s state energy producer Petrobras.

As in the 2012 offering, Milbank’s team representing SBM Offshore was led by Project Finance partner Dan Bartfeld, along with Structured Finance partner Jay Grushkin.  Also working on the transaction was associate Sean O’Neill.

“We’re thrilled to have worked with SBM Offshore in another large bond offering, this time funding the company’s presence in North American waters,” Mr. Bartfeld said.  “SBM’s platforms play a critical role in the offshore energy sector and we look forward to further transactions as the company expands its fleet and further develops leading-edge systems for use in offshore development around the world.”

“SBM’s return to the private placement market reinforces the company’s successful strategy of diversifying its funding sources and reinforces its relationships with a sophisticated group of institutional investors that have displayed an appetite to fund this type of asset,” Mr. Grushkin said.

The bond placement follows a series of successful private placement transactions by Milbank in connection with the vessel and offshore oil and gas sectors, including the 2013 bond financings by Meridian Spirit ApS, a special purpose LNG tanker company owned by Teekay LNG Partners LP and Marubeni Corporation, and Teekay Shuttle Tanker Finance LLC, a wholly owned subsidiary of Teekay Offshore Partners LP, the first multi-vessel and multi-issuance vessel private placement.