John Fredriksen-controlled Avance Gas has struck a deal to sell its entire very large gas carrier (VLGC) fleet to Andreas Sohmen-Pao’s BW LPG in a $1.05bn cash and shares deal.
The Oslo-listed unit of Singapore’s BW Group will be taking over 12 ships built between 2015 and 2023, adding to its fleet of 41 VLGCs. The transaction and vessels’ delivery are expected to close by the end of the year and cover a 12.77% stake in BW LPG worth about $333m, $585.4m in cash, and the novation of $132 debt related to two sale and leaseback vessels.
Commenting on the deal, Sohmen-Pao, chairman of BW LPG, said: “This strategic transaction supports BW LPG’s ambition to serve our customers with enhanced shipping and product delivery options in the fast-growing LPG space. The addition of these 12 vessels will result in an expanded fleet, greater flexibility, and are expected to be accretive to earnings based on our market view. They will also support our product trading and terminal activities.”
The Øystein Kalleklev-led Avance Gas is expected to generate a profit of between $310m and $320m from the sale. Earlier this year, the company also sold four VLGCs to other buyers, which in total will now bring about $435m of profit in 2024. After the closing, Avance Gas will become the second largest investor in BW LPG and own four medium-sized gas carriers capable of carrying full ammonia cargoes.
“The fleet of Avance Gas is today a bit sub-scale, and we have therefore found it more attractive for our shareholders to take advantage of the relatively high secondhand prices and sell the VLGC fleet to BW LPG,” said CEO Kalleklev, adding: “We find BW LPG well positioned with an integrated business model priced at a relatively modest price and this transaction will further strengthen BW LPG with both cost and income synergies. In our pragmatic view, it doesn’t matter whether the ships are black or light green as long as they are generating cash.”
This fleet expansion comes at an opportune time with VLGC newbuild deliveries abating and continued growth in global LPG export volumes, BW LPG said. Global VLGC fleet will count about 400 ships by the end of the year, with 13 additional newbuilds scheduled for delivery in 2025.
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