Shareholders of Hoegh LNG Partners are looking for answers around the $309m take-private offer from its parent company.

Sources close to the situation told TradeWinds that a request for documents has been made to Hoegh LNG, with stakeholders concerned that they are being forced out at a substantial discount, even following May’s beefed-up $9.50-per-share offer.

Hoegh LNG, an owner of five floating storage and regasification units and itself a public company until it was taken off public exchanges last year in a deal with Morgan Stanley, first made a $4.25-per-share offer in December before the increase.

But better than either offer was the one New Fortress Energy put forward at $12 per share, disclosed in an early July regulatory filing and discussed in a note from Stifel analyst Ben Nolan.

Nolan said the deal had “seemed questionable” and followed the cancellation of the 170,000-cbm PGN FSRU Lampung (built 2014) charter over contractual issues and Hoegh LNG terminating a line of credit.

Improved market

“At that time, [Hoegh LNG Partners] was forced to cut its distribution to refinance debt that was coming due and for which they were no longer able to use the revolver,” Nolan said in the note, published on 22 July.

“Not surprisingly, the unit price fell from $17.87 to $4.32 in a month.”

With the FSRU market much improved as Europe looks to wean itself off Russian gas, he said fair value would be above $12 per share.

He further noted that the outstanding offer paled in comparison to the other LNG take-private deals cut last year, including the acquisition of Golar LNG Partners by New Fortress.

“Even [Hoegh LNG Partners’] own advisors — Evercore — presented a range of values of $8.69 to $15.15 based on 2022 Ebitda on the day management accepted the offer,” Nolan said.

“For some reason, the sponsor lowballed the advisor’s value estimate despite the fact that there was an offer on the table almost exactly in the middle of the range.”

Hoegh LNG did not return a request for comment.

On Monday, Hoegh LNG Partners’ New York Stock Exchange-traded shares had fallen a penny at lunchtime to $9.14.

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