New York-listed Golar LNG is tackling a looming bond maturity by testing the water with investors for a new issue.
The company also announced new loans of up to $382m.
Investment banks DNB Markets and Pareto Securities have been brought in as global coordinators for the bond deal, while Danske Bank and Nordea Markets are lead arrangers.
They will arrange a series of fixed-income investor calls from 4 October.
A US dollar four-year senior unsecured issue may follow, subject to market conditions, Golar LNG said.
Net proceeds will go towards refinancing a $402.5m convertible bond maturing in February 2022.
Cash will also go towards general corporate purposes.
The convertible bond pays interest of 2.75%.
Positive move
Fearnley Securities said it was overall a "positive" to see Golar addressing near-term maturities and releasing liquidity from under-leveraged assets.
"With the two liquidity events freeing up net proceeds of $174m, Golar obtains valuable flexibility to reduce the amount of unsecured debt, with a smaller unsecured bond, or prepay more debt on its LNG carrier fleet," the investment bank said.
Fearnleys expects the next steps to evolve around a potential spin-off of the LNG carrier fleet.
"With a strong underlying market, driven by tight gas markets and vessel availability, a firm outlook for the coming years and vessels coming off contracts, we believe this should be a more feasible task...than has been the case previously," analysts Peder Nicolai Jarlsby, Erik Gabriel Hovi and Ulrik Mannhart said.
Golar chief executive Karl Fredrik Staubo was asked by analysts in August about the company’s spin-off of its shipping activities.
He said the company would be open to doing this with partners. But he added Golar will not expose itself to be reliant on them.
An earlier attempt with Awilco LNG and TMS Cardiff Gas did not materialise.
The LNG carrier company also said it had sealed two new cheaper bank loans worth up to $382m.
A three-year revolving credit facility of $200m has been secured against the company’s shareholding in New Fortress Energy at an interest rate of Libor plus 3%.
FSRU refinanced
This replaces the existing $100m loan maturing in December at a coupon 1.5% higher.
And Golar has also arranged a five-year facility for its FSRU Golar Tundra of up to $182m at the same rate.
The previous financing on the unit was worth $104.4m at interest of Libor plus 3.85%.
Both of the bank facilities are with existing lenders, which were not named.
The company believes the LNG market is set on a positive track as demand increases and constraints to excessive newbuilding and the older fleet kick in.
Staubo told TradeWinds earlier in September that LNG shipping has been "extremely tough" for the past decade.
"What we see right now is extremely interesting, with counter-seasonal patterns on top of cyclical strength, and that's what's changed for the first time in a long time," he said.
"The LNG market is here to stay and to increase, whether it’s a transition fuel or as a longer-term cleaner fuel. We are very confident that that is the case," he added.
