What opportunities are there for you today?

Taking advantage of debt financing and other investment options

Amsterdam, 28 January 2014 Bert van der Toorn Managing Director, Head of Oil and Gas, Europe and CIS

1

Agenda

1. Market trends

2. Financing options (in view of market trends)

3. Structuring your financing package

4. Some case studies

5. Going forwards

6. Questions?

7. Disclaimer

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Finance Market Finance Package

Key elements

Project O&G Market

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1. Market trends

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Project finance volumes (2013 vs 2012)

Source: Dealogic Project Finance Review, Full Year 2013 Final Results, January 2014

5

Debt structures globally

Source: Dealogic Project Finance Review, Full Year 2013 Final Results, January 2014

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Debt structures in the oil and gas sector

0

10000

20000

30000

40000

50000

60000

70000

2009 2010 2011 2012 2013

Bond (US$m)Loan (US$m)

Source: Based on PFI Financial Leagues Tables

Volume of loans and bonds in the oil and gas sector

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Europe: Impact of alternate financing on loan demand

Source: European Central Bank, The Euro Area Bank Lending Survey, 3rd Quarter of 2013, October 2013

Positive impact on loan demand

Negative impact on loan demand

Changes in demand for loans to enterprises (Net % of banks reporting positive contribution to demand)

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Summary

• Volumes slowly increasing globally

• Generally: Loan vs bond vs equity mix is changing

• Specifically: increase in bonds (decrease in loans) in oil and gas sector

• Credit standards loosening very slowly

• Demand for bank loans has declined due to alternative finance but less than before

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2. Financing options (in view of market trends)?

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Institutional investors

Need to find alternative investments

Direct Structured solutions

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Direct: Investing in loans • Institutional side regulation (Solvency II for insurers, IAS 19 pension funds)

• (Higher rated) loans attractive under Solvency II

• Loans as an attractive asset class :

A. Depth of market B. Floating-rate yield

C. High recovery rates

In the case of Infrastructure loans:

D. Higher yields

E. Long maturities

Unattractive features:

A. Revolving / Undrawn Facilities

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Structured solutions: Debt vs Bonds

Some recent activity: Sabine Pass; Sakhalin 2 LNG; OGE; Nord Stream; Castor; South Stream?

Debt Bonds Shorter maturity, refinancing risk Long maturity

Floating rate finance Fixed rate funds

Prepayment flexibility Focus on long-term yield

Relationship lenders Bondholders passive – hard to organise

More flexibility: client driven mentality Difficult to modify terms

Heavily negotiated covenant package with closer monitoring

Lighter covenants: less discretion

Default: typically work out Default: trade out not work out

Less market risk: committed funding and drawdown, when required

One closing: no drawdowns

Ratings not normally required or obtained Ratings are vital

No public disclosure required Public, listing, no confidentiality agreement

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

US

EuropeBank loans (excl. Mortgages) Outstanding corporate bonds

United States Europe

• c.80% debt from the public market • 80% of corporate financing from bank

loans

• Increase in direct investments in the form of loans and private placements

• Banks originate credit and hold until maturity.

• Limited share of syndicated loans

• US banks :‘Originate-to-Distribute’ model • Regulatory pressure on banks to shorten their balance sheets

Structured solutions: US vs Europe

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• Pursue infrastructure targets

• New investment platform :

1. A Note and B Loan Banks seeking longer term

2. A Notes Investors seeking high credit instruments

3. B Loan Banks seeking shorter term

• Regulatory climate

• Availability of finance

PEBBLE financing structure

Background Purpose Benefit

• Procuring Authority

• Sponsors

• A Note Investors

• B Loan Lenders

• Stimulate capital market participation

First PEBBLE-backed financing closed in September 2013:

€300 million (US$405.6m) Zaanstad Prison building in the Netherlands.

Structured solutions: Innovative ways to flavour the market

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EIB Project Bond Credit Enhancement (PBCE) Initiative

In the form of either: (1) PBCE facility; or (2) contingent letter of credit

• Provide subordinated instruments* to eligible projects

• Enhance credit rating of Senior Bonds

• Appetite of institutional investors

• Sources of finance and minimise funding costs

• Capital market investment

• Regulatory climate

• Low credit ratings

• Drop in credit enhancing mechanisms

Background Purpose Benefit

First project bond under the PBCE initiative closed in July 2013: €1.4 billion (US$1.85bn) project bond issue for

the Castor underground gas storage project in Spain

Structured solutions: Innovative ways to flavour the market

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Structured solutions: Innovative ways to flavour the market

ECA BOND Wrapped bond

(ECA or monoline insurer)

ECA-backed bond

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Other interested investors and their perspectives Characteristics Pension funds/ sovereign wealth Infrastructure funds Private equity funds

Investment horizon

• Long-term investors, typically 10-30 years

• Medium-term investors, with holding periods

ranging from 7-13 years

• Short to medium holding period of 3-7 years

Investment level • Diverse, both on holding and asset level

• Diverse, both on holding and asset level

• Typically aim to invest on holding level

Corporate governance

requirements • Limited to medium • High • Medium

Minority vs. Majority

• Typically a minority stake with a passive role

• Majority, aim to obtain control

• Diverse, both minority as well as majority, dependent

on fund

Return requirements

• No cash yield requirement

• IRR of 8-13% • IRR of 20-30%

• Yearly cash yield requirement

• IRR of 13-20%

Attractions

• Long-term investment horizon

• Experienced minority investors

• Control not key

• Attracted by storage market

• Long(er) investment horizon (7-13 years on average)

• Experienced minority investors

• Control not key

• Large number of Oil & Gas oriented PE sponsors with

sufficient capital Supportive of buy & build strategy

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Summary

• Institutional investor interest

• Bonds have their advantages but…

• ….structured solutions are needed

• Equity investor interests

In the context of market trends :

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3. Structuring your financing package

1. Company

2. Purpose

3. The business

4. Other lender considerations

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• Seeking further leverage? • Expansion? • Acquisition finance?

Who are you and what are you looking for?

The company and purpose

• Refinery facility conversion?

1. Existing storage company?

2. Greenfield storage company?

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tell me about your business…

The business

1. Structure • Ownership / shareholding and assets • Contractual relationships and rights

2. Environment • Location and environmental concerns

• Supply and demand / competition (and

monopolies)

3. Operations & financials • Rating

• EBITDA / opex & capex

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Impact

Construction & Completion

2

Post-Completion/ Operations & Maintenance

3

Cash Flow Volatility/ Force Majeure

4

Due Diligence

1

Lender considerations Factor

• Legal, Technical, Market, Environmental and Insurance Due Diligence

• Sponsor support

• Lump-Sum EPC Contract

• Technology; Operations and Maintenance

• Accounts / Cash Flow / DSRA / Security / Distributions / Ratio-testing

• No market or margin risk on capacity

• Limited merchant risk

• Structure

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“Who are you and what would you like?”

“Tell me about your business”

The financing package

The right package - Size - Tenor - Structure - Covenants - Security

Bank debt

Other debt

Bonds

PEBBLE structure

EIB PBCE structure

Infrastructure funds

Private equity funds

Pension funds / sovereign wealth

Other creative structure?

You

Market

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*Based on publicly available information

4. Some case studies*

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Sea Tank 510 Liquid Bulk Storage Terminal Structured Finance

ING's role • ING acted as

Mandated Lead Arranger, Technical Bank and Account Bank for the financing

• ING acted as Hedge Coordinator

Financing details Debt:Equity: +/-80:20 Size and structure: US$240 million Tenor: 9 year Financial Covenants: Customary Security: Customary

Natural Resources

Belgium 2011

Undisclosed EUR 165 mn Project Financing

Bookrunner , MLA, Technical Bank and Hedging Coordinator Natural Resources

Belgium 2011 Belgium 2011

SEA-Tank 510 EUR 165mm

Project Financing

Bookrunner, MLA, Technical Bank and Hedging Coordinator

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Vopak Terminal Eemshaven BV Structured Finance

ING's role • ING acted as

Documentation Bank during the structuring process

• ING acted as Mandated Lead Arranger, Facility Agent, Security Agent and Account Bank for the financing

• ING acted as Hedge Coordinator

Financing details Debt:Equity: 87:13 Size and structure: $121million (in aggr): term loans and smaller facilities Tenor: 17 years for term loans and shorter for small facilities Security: Customary

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Vopak Horizon Fujairah Limited Structured Finance ING's role

• ING acted as Mandated Lead Arranger

• ING acted as Swap Provider and Hedge Coordinator

Financing details Size and structure: US$130 million Tenor: 8 years Security: Customary

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Structured Finance

Financing details Size and structure: US$350 high yield bond / US$396 facility Tenor: bond: 10 years / facility: 7 years Financial Covenants: Customary Security: Customary

LBC Tank Terminals ING’s role • ING acted as

Mandated Lead Arranger and Bookrunner in the Syndicated Credit Facilty

• ING acted as bookrunner in the HY Bond

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Structured Finance

ING's role • ING acted as

Mandated Lead Arranger

• ING acted as Swap Provider

Financing details Size and structure: €420m Tenor: 7 years

Macqpisto oil product storage

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Structured Finance

ING's role ING acted as Mandated Lead Arranger

Financing details Size and structure:€ 196mln Tenor: 5 years

Oystercatcher

Natural Resources

Luxembourg 03/13

3i – OystercatcherEUR 195mTerm Loan and Revolving Credit Facility

Mandated Lead Arranger

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5. Going forwards

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What could we see?

• Changing credit standards

• Institutional investors

• Bonds

• Structured solutions

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6. Questions?

?

???

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7. Disclaimer

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Disclaimer

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