PT Medco Energi Internasional Tbk.’s US$500 Million Secured RBL Facility (Project Gajah) as 2019 Indonesian Oil and Gas Deal of the Year

May 30, 2019

The Asset has named PT Medco Energi Internasional Tbk.’s (MedcoEnergi) US$500 million six-year secured revolving reserve-based lending (RBL) facility as the “Oil and Gas Deal of the Year – Indonesia” at its Asset Triple A Asia Infrastructure Awards 2019. Gibson Dunn advised MedcoEnergi subsidiaries, PT Medco E&P Malaka and PT Medco E&P Tomori Sulawesi as borrowers, and MedcoEnergi as sponsor on the deal, which was the largest reserve-based financing closed in Asia in 2018. The Gibson Dunn team was led by Jamie Thomas and assisted by U-Shaun Lim. The winners were announced on May 30, 2019.

Medco Energi is a rapidly expanding oil and gas player, headquartered in Indonesia and we are honored to have represented the Medco Energi group on this US$500 million six-year secured revolving reserve-based lending (RBL) facility arranged by the mandated lead arrangers and bookrunners Australia and New Zealand Banking Group, ING Bank and Société Générale.  The transaction had to be structured carefully to fit and work around Medco Energi’s high yield notes and the structural impediments recently thrown by the laws of Indonesia, including government intervention with respect to the distribution of offtake to third parties (e.g. under the Ministry of Energy and Mineral Resources Regulation No. 42 of 2018 on Priority of Petroleum Utilization for the Fulfillment of Domestic Need) amongst other things and there was the added complexity of having  both pre- and post-completion tranches which detailed various parameters for utilization, depending on whether such financing was for exploration, expansion or post completion of an asset. There were protracted negotiations on the inputs and assumptions which determine the borrowing base amount at any point in time and we negotiated for our client a unique level of flexibility.  Thankfully, we were working with a sophisticated group of lenders and their legal counsels and we were pleased to see that the financing was very well received in the primary syndication market by a large number of international lenders. We thank everyone on the deal for their effort and support.