In the financing of an offshore drilling rig it is required the participation of more than 10 international banks and development banks from different countries
Credit institutions require that ship mortgages are registered in a jurisdiction specialized in merchant marine, as it is the case of Panama- Enrique Tovar, Planning Director of
Enrique Tovar, Planning Director of Grupo R, said that foreign financial structures used by this company are not only legal, but also necessary for the type of activities it performs, and rejected involving evasion of taxes.
“The structures do not constitute an illegal act, nor of tax evasion. Illegal actions can occur in any company incorporated in any jurisdiction”, he said.
In an interview, following the so-called Panama Papers or Papeles de Panamá, he explained that the legal objectives of these structures include, among others, proper mechanisms of ownership to pursue lawful activities that require them: “It is the case of the structure that Grupo R employs to purchase its vessels.”
He explained that, globally, the acquisition of vessels and other marine units, as it is the case of offshore drilling rigs, require from international financing, either banking or through capital markets (bonds).
In the bank financing of an offshore drilling rig, he commented, sometimes it is required the participation of more than 10 international banks and, in certain cases, of development banks from different countries.
Milan Tovar said that the nature of naval assets, which can move and operate worldwide, creditors require a specific purpose structure that provides a sufficient package of guarantees to cover credit risks. Among them, he mentioned the ship mortgage of the assets to be financed and a pledge on the shares of the accredited owner of the asset.
“Credit institutions require that ship mortgages are registered in a jurisdiction specializing in merchant marine, which also have a legal framework which allows a quick enforcement in the event of a default by the borrower”, he said.
Planning Director of Grupo R said that this is the case of Panama, that most of the world´s fleet of vessels fly its flag, being also the country where the respective maritime mortgages are registered”. “All this, besides being the international practice, complies fully with all legal and fiscal requirements and has been tested for many years”, he said.
He pointed out that in the financing of these type of assets, banks restrict cash flow avoiding dividends throughout the entire period of the loan. Any surplus of cash after paying principal, interest and taxes, is used for mandatory prepayments or to fund reserves for paying the financing. This period is usually between 8 and 12 years, he said.