Idan Ofer-backed Cool Company has signed sale-and-leaseback deals that fully finance a pair of LNG carrier newbuildings on order in South Korea.
The New York-listed shipowner said China’s Huaxia Financial Leasing agreed to buy the 174,000-cbm Kool Tiger and Kool Panther and charter them back over 10 years.
The ships are due for delivery from Hyundai Samho Heavy Industries, an offshoot of shipbuilding giant HD Hyundai Group, in the second half of 2024.
CoolCo chief financial officer John Boots said the leasing deal establishes a new relationship with Huaxia.
“Having completed the financing of these two state-of-the-art, two-stroke MEGA LNG carrier newbuilds, this materially strengthens CoolCo’s future cashflow potential and strategic capabilities in a non-dilutive manner that clearly benefits our shareholder,” he said.
“The combination of our robust financial position and a substantial backlog in charters provides us with considerable flexibility, both commercially and financially, enabling us to further grow the company. We believe that the near and long-term opportunities in the LNG transportation market are substantial, supported by an increased emphasis on energy security and the dramatic expansion of global LNG production currently underway.”
The deal with Huaxia comes almost four months after CoolCo said it exercised options to acquire the newbuildings from EPS Ventures, a unit of Ofer’s Eastern Pacific Shipping, for some $234m each.
At the time, CoolCo said it had commitment letters in hand to finance the ships.
CoolCo said the sale-and-leaseback financing is set at a fixed rate per day, which implies an interest rate of 6% per year and a minimum loan-to-value ratio of 80%. The company did not reveal the rate on what is likely a bareboat charter.
There could be additional borrowing capacity under the deal, depending on charter employment that the shipowner plans to secure before delivery.
TradeWinds reported in August that CoolCo was in talks with “multiple charterers” to employ the newbuildings.
