Flex LNG eyes Geveran LNGC newbuilds

Move will see John Fredriksen entities consolidate LNG activities in Oslo-listed vehicle.

John Fredriksen is selling two privately owned LNG carriers to Oslo-listed Flex LNG, in which he is already the dominant shareholder.

The high-end MEGI newbuildings are on order at DSME with scheduled delivery due in early 2018 and their arrival will double the Flex fleet.

Flex LNG said the deal would position it to capitalize on the expected tightening in the LNG shipping market and anticipated growth in the FSRU space.

Part of the cost of the newbuildings will be settled via the issue of 78 million new shares to Geveran, with a $100m private placement also part of the funding package.

Flex will also be responsible for the remaining $20.4m to be paid on the newbuildings.

A seller’s credit revolving credit facility is in place for the ships, which will be replaced with bank financing upon delivery. 

Flex LNG said the revolver's structure will allow it to minimize interest cost during construction, while allowing it to take advantage of growth opportunities.

A private placement has been completed and a $10m subsequent offering announced to bring smaller shareholders into the picture.

Arctic Securities, DNB Markets, Fearnley Securities, Nordea Bank and Pareto Securities handled the placement.

The issue is the latest sign of an opening up of the capital markets to shipping, particularly in Norway.

Last week Songa Bulk secured $100m from a private placement, while Fearnley Securities has been involved in shipping equity raises worth over $800m since the summer of 2016.

Following completion of the offering, Flex LNG said it will consider applying to have its shares transferred from Oslo Axess to the Oslo Stock Exchange.

Fredriksen first bought into Flex in 2013 and has long been expected to put his privately controlled LNG tonnage into the vehicle.