Golar LNG has confirmed that its FLNG Gimi project has secured a firm $700m underwritten financing commitment.
It was one of a host of updates from Golar on financing and projects which have been well received by analysts covering the company.
Singapore's Clifford Capital, ING Bank, Natixis and ABN Amro Bank acted as underwriters for the new Gimi facility.
The financing has a tenor of seven years post commercial operations date and a 12-year amortisation profile.
Never in doubt
The financing has been secured by Gimi MS Corp, which is 70% owned by Golar LNG and 30% by Singapore’s Keppel Corp.
Jon Chappell, an analyst at Evercore ISI, said: "Although traditional debt funding should have never been in doubt given the quality of the project counterparty, the quick closing of this facility limits GLNG’s cash outflows through the early stages of the conversion process."
Donald McLee of Berenberg said the loan was a modest positive for Golar and reflects an improving finance environment for FLNG compared with Golar's Hilli and Fortuna projects.
"We also expect Golar to look to secure additional financing, up to a total of $900m to $1bn, against the asset, as the project moves closer to its commencement date in 2022," the analyst added.
At the same time Keppel Shipyard has received a final notice to proceed with the conversion of the FLNG Gimi.
It said the total contract is worth $947m and builds on the issuance of the limited notice to proceed (LNTP) in December last year.
In February 2019 TradeWinds reported that Golar LNG had tied up a 20-year contract for the FLNG Gimi to work for BP on the first phase of the Greater Tortue Ahmeyim project
When completed, it will be stationed at a nearshore hub located on the Mauritania and Senegal maritime border.
Expected to begin production in 2022, it is designed to produce an average of about 2.5mt of LNG per annum.
Cash flow approval
Separately, Golar LNG said the project developers of the Croatian FSRU facility, LNG Hrvatska have also issued it with a notice to proceed with the conversion and subsequent purchase of the LNG carrier Golar Viking (built 2005).
Conversion capex will largely be funded by stage payments from LNG Hrvatska under the agreement, Golar LNG said.
McLee said he liked the transaction as it removes one of Golar's older steam assets from the spot fleet amid a softer rate backdrop, while also adding to long-term cash-flow visibility.
It also confirmed that Chinese shipyard Hudong has been selected to carry out the conversion work after what was described as a “robust vetting process” with work expected to start in early 2020.
CSSC Leasing, an affiliate company of the yard, is expected to provide both conversion financing and bridging finance for the current vessel facility between yard entry and sale to LNG Hrvatska for EUR 159.6m ($180.4m) upon completion.
Attractive entry point
"We continue to believe there is a disconnect between GLNG’s progress on several fronts across the LNG supply-chain and stock performance and believe that disconnect offers an attractive entry point," said McLee.
In further finance news, Golar LNG said lenders had agreed to extend the maturity of the FSRU Golar Tundra by two years to June 2021.
It added that having agreed a term sheet, good progress has also been made with respect to refinancing the December 2019 maturing LNG carrier Golar Arctic facility.
"We believe these transactions enhance Golar’s near-term liquidity standing, while also providing a bridge to a potentially firmer employment environment," McLee said.
“In line with guidance provided in the last quarterly earnings announcement Golar continues to make progress in line with expectations,” said chief executive Iian Ross.
“The company looks forward to providing further details when it reports its first quarter 2019 results next month.”