Port Security Conference

June 11, 2003

World Bank unit backs Brazil PSV venture
The International Finance Corporation (IFC), the private sector financing arm of the World Bank Group, is to provide up to $70 million to UP Offshore, a start-up shipping group with subsidiaries incorporated in Brazil and Panama.

The investment will be used by UP Offshore for the acquisition of up to six newly built platform supply vessels in order to provide transportation services to oil and gas companies engaged in exploration and production activities on the Brazilian Atlantic shelf.

It is understood that UP Offshore has placed an order with Brazil's EISA (Estaleiro Ilha S.A.) for four 5,000 hp, 84 m PSV's of Vik-Sandvik design and is negotiating with a Chinese yard for three similar vessels. Delivery of the EISA built vessels is scheduled for within 22 months, or earlier.

This six-vessel construction program is the first phase of a larger program to build and operate supply vessels to service the rapidly growing offshore oil industry in Brazil. It will also promote the development of backward linkages of various Brazilian industrial and service sectors, including linkages between shipyards and local providers of components and materials needed to built ships.

IFC's financial package for UP Offshore includes an equity investment of up to $10 million for IFC's own account, loans of $24.7 million for IFC's own account, and syndicated loans totaling $35.3 million for the account of Caterpillar Financial Services Corporation, Natexis Banques Populaires and Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. (FMO).

UP Offshore is sponsored by Ultrapetrol (Bahamas) Ltd., an established shipping company with extensive tanker and river barge operations in Latin America. The AIG-GE Capital Latin American Infrastructure Fund L.P. is also a major shareholder in UP Offshore.

"This transaction is a good example of how IFC can apply its experience in structuring and mobilizing funding for infrastructure projects in emerging markets to support private sector involvement in key infrastructure areas," said Francisco Tourreilles, Director of IFC's Infrastructure Department, adding "IFC's financing for UP Offshore will strengthen Brazil's efforts to exploit deep-water natural resources important to the country's economic growth."

"By providing the long-term financing package to UP Offshore, IFC demonstrates its continued support to the Brazilian private sector," noted Bernard Pasquier, IFC's Director of the Latin America and Caribbean Department. "Such support is especially important when access to long-term funds becomes more difficult."

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