Avance Gas Holding Ltd: Avance Gas agrees to sell two newbuildings for $240 million at a $73 million estimated profit
08 Dezember 2023 - 7:01AM
Avance Gas Holding Ltd: Avance Gas agrees to sell two newbuildings
for $240 million at a $73 million estimated profit
Hamilton, Bermuda December 8,
2023 Avance Gas Holding Ltd ("Avance Gas" or the
"Company") (OSE: AGAS) today announce that it has agreed to sell
its two remaining 91,000 cbm dual fuel newbuildings scheduled for
delivery next year. The buyer has agreed to pay $240 million en
bloc for the two newbuildings when they are delivered from the yard
i.e., ex-yard delivery. The newbuildings, Hull number 2367 and 2368
with intended name Avance Castor and Avance Pollux, were originally
scheduled for delivery in the third and fourth quarter of 2023 but
has been delayed with expected delivery now scheduled for March and
May 2024, respectively.
The newbuildings were contracted in April 2021
at price of approximately $78 million each. They have since been
upgraded with capex of about $3 million each for the ships to be
able to load ammonia cargoes as well as being ready to run on
ammonia as fuel when this feature becomes commercially available.
Hence, Avance Gas expect to book a profit of about $73 million from
the sale, net of all delivery and transaction costs. The
cash release from the sale is expected to be $120 million as we
have already paid about $47 million in milestone payments to the
yard in accordance with the Ship Building
Contract. Furthermore, since these two ships have
been financed with a $135 million Sale-and-Leaseback agreed in
August 2022, Avance Gas has agreed with the financier to swap the
lease from the two newbuildings to the sister ships Avance Polaris
and Avance Capella (built 2022) which are currently financed under
a bank loan maturing in 2027. Such refinancing of Avance Polaris
and Avance Capella is expected to be carried out during first
quarter of 2024 and this will further increase our cash by
approximately $41 million. The refinancing will also extend the
maturity of the financing of Avance Polaris and Avance Capella from
2027 to 2034. Following this refinancing, Avance Gas will have no
loans maturing prior 2028 given the recent announced $43 million
refinancing of the VLGC Pampero.
As such, the cash release from the sale of the
ships and swap of the sale-and-leaseback agreement is expected to
be in total $160 million, or slightly above $2 per share. The
parties have signed and executed a Memorandum of Agreement in
relation to the sale of the ships. The sale is therefore only
subject to certain closing conditions, in line with industry
standards. Øystein Kalleklev, CEO of Avance
Gas, commented: “We are pleased to announce the $240 million
sale of our two remaining VLGC newbuilds which will generate both a
very attractive book profit of about $73 million and a cash release
of approximately $160 million. While we were looking forward to
expanding and renewing our fleet with these two high spec
newbuildings, our focus is maximizing shareholder value. While
maximizing shareholder value might seem less in vogue these days
than in the past, it remains our number one priority and is our
license to operate as prudent stewards of our shareholders’
capital. The transaction announced today highlights the sharp
positive shift in outlook for the VLGC market and this has enabled
us to pocket a sizeable profit and thus take some money of the
table in an improved market. Once the
transaction has been completed which is expected to occur during
second quarter of 2024, Avance Gas will evaluate returning a
substantial part of the cash proceeds to its shareholders. We
raised $65 million in an equity issue in April 2021 to finance the
acquisition of these two newbuildings of which $49 million has been
utilized as pre-delivery capex. Given the fact that we already hold
a substantial cash position, we will therefore consider reducing
our paid-in capital to make such return of capital to our
shareholders more tax efficient than through ordinary
dividends.”
For further queries, please contact: Media
contact: Øystein Kalleklev, CEO Tel: +47 23 11 40 00
Investor and Analyst contact: Randi Navdal
Bekkelund, CFO Tel: +47 23 11 40 00
ABOUT AVANCE GAS Avance Gas operates in the
global market for transportation of liquefied petroleum gas
(LPG). The Company is one of the world's leading owners
and operators of very large gas carriers (VLGCs) and owns
twenty LPG ships consisting of fourteen modern VLGCs including the
two dual fuel LPG VLGCs for delivery and resale in 2024 and
four dual fuel MGCs for delivery in 2025 and 2026.
For more information about Avance Gas, please
visit www.avancegas.com
This information is subject to the disclosure requirements
pursuant to Section 5-12 the Norwegian Securities Trading Act
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