Despite rumours swirling around the status of Hygo Energy Transition's initial public offering and the Golar LNG sell-off, analysts are relatively sanguine on the situation.
Several analysts covering the Tor Olav Troim-backed LNG player were still relatively positive on Golar LNG, even if the company's planned spin-off of its gas carrier fleet into Hygo is delayed due to a bribery investigation implicating its chief executive Eduardo Antonello.
"It's come at a bad time in terms of getting the IPO off," Jefferies' Randy Giveans told TradeWinds on Friday.
"We thought it was going to be a very big catalyst for [Golar LNG] shares. ... We still think there's upside without a near-term Hygo IPO."
On Wednesday, news broke locally that Brazilian federal police had executed 25 search warrants connected to an investigation into bribes a Seadrill subsidiary may have paid $40m to Petrobras executives to secure a $2.7bn contract in 2011.
It was the latest development in the Operation Car Wash Petrobras corruption investigation and delayed the Hygo IPO, though there are reports it has been pulled.
When the bribes were allegedly paid, Antonello was working for Seadrill and tasked with finding business for the John Fredriksen-backed company in his native Brazil.
Antonello left his position with Seadrill in 2015 to take the chief executive position at Golar Power, a joint venture with Stonepeak Investment Partners that is being spun off and renamed Hygo.
Golar LNG announced the Hygo move on 31 August, hoping to raise $558m by selling 23.1m shares.
The move pushed its shares from $10.10 to $13.19 on 18 September, before cratering 32% on Thursday after the news began to circulate internationally, closing at $6.86. On Friday, shares closed even lower at $6.79.
Stifel analyst Ben Nolan said the weakness in shares could be an "absolute gift" to buyers, though the investigation injected risk into the stock.
He said any direct connections between the investigation and the Golar companies were unlikely.
The company once had a connection to Seadrill through Fredriksen, but that was severed when he and Troim split.
Nolan said even without the Hygo IPO, Golar LNG could still secure a contract extension for the floating LNG unit Hilli Episeyo and good news could come from the under-construction floating LNG unit Gimi, which is subject to a force majeure claim from BP.
He maintained his buy rating and $19 target price.
"While Hygo is certainly more of a question [mark], the second two are very much still in play," he said.
Evercore's Jonathan Chappell also maintained his rating of outperform.
He said the most likely scenario was a drawn-out investigation into Antonello's alleged wrongdoing, delaying the Hygo IPO for "an indeterminate amount of time".
As long as the Sergipe power plant Hygo developed is proven to have been the result of a clean bidding process, it should add $4.66 per share to Golar LNG's share price, resulting in his $12 target.
