OSX Brasil Receives $736 Million in Financing from Merchant Marine Fund

RIO DE JANEIRO–Brazil’s Merchant Marine Fund has approved additional financing for oilfield services company OSX Brasil SA (OSXB3.BR) to complete construction of the company’s shipyard, OSX said in a regulatory filing Monday.

The Merchant Marine Fund will make available an additional credit line of up to 1.5 billion Brazilian reais ($736 million) to finance OSX’s shipyard at the Acu port in northern Rio de Janeiro state. OSX previously received BRL2.7 billion from the fund via loans from state-run banks Caixa Economica Federal and the Brazilian National Development Bank, or BNDES.

While the Merchant Marine Fund has approved the availability of the financing, OSX still needs to agree to terms with banks acting as the fund’s agent, a spokeswoman for the company said.

OSX is part of a rebirth in Brazil’s shipbuilding sector, driven by expected demand for ships, platforms and drilling rigs as the country develops recently discovered oilfields off the country’s coast. Brazil was once one of the world’s largest shipbuilding countries before an economic downturn in the 1980s caused the sector to nearly shut down.

OSX is positioning itself as a key player in the renaissance of Brazil’s shipbuilding industry, one of a series of new shipyards under construction to meet demand for oil platforms and drilling rigs the government wants to build in the country. Oil companies operating in Brazil are obligated to use a certain percentage of locally produced goods and services under strict local content rules.

The shipyard is expected to start operations in the first quarter next year.