MOL repays existing loans through issuance of project bond for FPSO charter project

Tokyo - September 18, 2019

Mitsui O.S.K. Lines, Ltd. (MOL; President & CEO: Junichiro Ikeda) has, through a Special Purpose Vehicle which owns the Floating, Production, Storage and Offloading ("FPSO") vessel Cidade de Mangaratiba MV24 ("the FPSO"), issued a project bond of approximately US$1.1 billion (hereinafter referred to as the "project bond") for an FPSO charter project in progress in an overseas market and used the funds to repay existing loans, which it had procured by limited recourse finance from a financial institution.

The project bond was issued for a long-term charter project for an FPSO, invested in by MOL, MODEC, Inc., Mitsui & Co., and Marubeni Corporation, and serving in the Iracema Sul, an offshore Brazil oil field. It is the world's first publicly offered project bond for an FPSO charter project.

The FPSO has been chartered since October 2014 based on a 20-year US dollar fixed rate charter contract signed by a consortium operated by Petrobras, Brazil's national oil company, and is one of the best-in-class FPSOs in Brazil with its operation accounts for approximately 4% of Brazil's daily hydrocarbon production.

MOL's management plan "Rolling Plan 2019" sets a strategy "Invest resources in fields where MOL has strength, mainly in the offshore business" as one of three core strategies to realize its 10-year vision "Collective Business Entity with No.1 Competitiveness in Respective Fields".

While the capital cost for FPSO projects has been financed mainly by project finance and shareholders' equity/loans, the project bond is an effective choice to expand the diversity of capital procurement and enhance capital efficiency, as it works to win orders for new projects, which have generated active interest among potential partners and customers thanks to a strong track record of stable, successful operations.

FPSO Cidade de Mangaratiba MV24 in operation in Iracema Sul oil field (Courtesy of MODEC, Inc.)

Mitsui O.S.K. Lines, Ltd. press release