Petrozuata

Case
study
“Petrozuata
C.A.”


(49.9%
 Interest)


(50.1%
 Interest)


Petrolera
Zuata


Agenda


•  Petrozuata
C.A.
 •  Project
financing
opAons
 ‐  Agency
debt
 ‐  Bank
debt
 ‐  Rule
144A
bond
market
 •  Project
risks
+
Deal
structure
protecAon


Agenda


•  Internal
financing
opAon
 •  Financing
soluAon
 •  Investment
grade
raAng
issue
 •  Pros
and
cons
of
invesAng
in
project
bonds
 •  Pros
and
cons
of
invesAng
in
equity
capital


Petrozuata
C.A.


•  Fully
integrated
producAon,
transportaAon
and
refinery
 project
 •  The
first
experience
of
mutual
projects
for
PDVSA
 •  AmbiAous
construcAon
schedule
 •  SubstanAal
expenditures
($2,425
bln)
 ‐  $1.450
billion
to
be
financed
through
debt
 •  50,1%
‐
49,9%
equity
structure
 ‐  The
joint
venture
is
classified
as
a
private
company
 ‐  Not
bound
by
public
companies
regulaAons
 ‐  34%
income
tax
rate
 •  PDVSA
retains
voAng
control!


Project
financing
opAons


•  Project
finance
 ‐  Agency
debt
 ‐  Debt
financing
 ‐  Public
bond
market
 ‐  Rule
144A
market
 •  Internal
debt
finance
by
PDVSA
 The
deal
ra>onale:

 
 To
 create
 win‐win
 situaAon
 for
 both
 parAes
 of
 the


deal
 which
 would
 provide
 incenAve
 to
 follow
 the
 contract
terms
and
avoid
opportunisAc
behavior


Project
finance
opAon


Advantages
 Disadvantages
 Inability
to
receive
 resources
from
 external
sources

 Increased
influence
 and
accountability
to
 external
investors
 Higher
disclosure
of
 financial
and
strategic
 informaAon
 Limited
managerial
 decision
making
 High
legal
costs
 Difficult
to
exit
 syndicaAons


•  Risk
management
 •  ‐  ProtecAon
 of
 the
 corporate
 balance
 sheet
 (risk
is
limited
to
the
amount
of
40%
 
of
all
 project
costs
‐
$975
mln.)
 •  ‐  Avoidance
 of
 potenAal
 ex‐post
 conflicts
 as
 in
case
if
they
were
bilateral
monopolists
 ‐  Risk
 of
 the
 project
 is
 not
 influenced
 by
 the
 •  risks
of
other
sponsor’s
projects
 •  Higher
leverage

 ‐  Reduced
agency
costs
 •  ‐ ...