Avance Gas chief executive Oystein Kalleklev will not be hurried into securing financing for new ships that are still two years away from delivery.
The John Fredriksen VLGC company said in its results statement on Tuesday that it has bought the 83,000-dwt Pampero (built 2015) out of Chinese leasing with a $43m, five-year bank facility at attractive terms.
Asked about other potential financing deals on an earnings call, the CEO was non-committal.
Avance Gas has two VLGCs due for delivery this year and in 2024, plus four midsize gas carriers coming from 2025.
Regarding the smaller vessels, Kalleklev said: “We have had several banks already knocking on this door and offering quite attractive financing — and more attractive than the one we did for Pampero, actually, because this has to do also with the green credentials of these ships.
“They make it very interesting for all of the banks to finance those ships. However, if we were to put in place financing, we would have to pay commitment fees to banks for up to three years.
“And we don’t really see the value in locking in financing now and paying commitment fees for such a long period.”
Avance Gas has liquidity through its cash position and vessel sales.
“We [would] rather do financing once we get closer to delivery,” Kalleklev added.
At that time, the company might have a clearer idea of long-term charters for the midsize gas carriers.
“That will also affect both the leverage we can put on and possibly also the margin in case we have a very good counterparty,” he argued.
New ships looking a bit costly
Asked about more fleet renewal, Kalleklev told the call the company was always happy to consider newbuildings.
“We have been doing some contracting the last two years,” he said. “But at the same time, we are also selling off older ships in order to renew the fleet. We are open to continue doing that, but prices for new ships or newbuildings now have become very elevated.”
With yards packed with orders for container ships and LNG carriers, VLGC prices have hit up to $120m, he revealed. With ammonia cargo capability, this rises to $125m.
The new Avance Gas ships cost $80m.
The focus will be on taking delivery of these carriers.
But he added: “If we find opportunities to add ships at attractive price points, we might do that. But that is something we are discussing with yards and the brokers all the time to see if we find a good angle to do something.”
